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Table of Contents

​

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

​ | ​
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
​ | For the quarterly period ended September 30, 2025
​ | ​
​ | OR
​ | ​
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
​ | For the transition period from _____ to _____

​

Commission File Number: 001-36439

PRECIPIO, INC.

(Exact name of registrant as specified in its charter)

​ | ​
Delaware | 91-1789357
(State or other jurisdiction of | (I.R.S. Employer
incorporation or organization) | Identification No.)
​ | ​
4 Science Park, New Haven, CT | 06511
(Address of principal executive offices) | (Zip Code)

​

(203) 787-7888

(Registrant’s telephone number, including area code)

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

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

​

As of November 11, 2025, the number of shares of common stock outstanding was 1,752,007.

​

​

​

Table of Contents

PRECIPIO, INC. AND SUBSIDIARIES

INDEX

​ | ​ |  | Page No.
​ | ​ | ​ | ​
PART I. | Financial Information | ​ | 3
​ | ​ | ​ | ​
Item 1. | Condensed Consolidated Financial Statements | ​ | 3
​ | ​ | ​ | ​
​ | Condensed Consolidated Balance Sheets at September 30, 2025 (unaudited) and December 31, 2024 | ​ | 3
​ | ​ | ​ | ​
​ | Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited) | ​ | 4
​ | ​ | ​ | ​
​ | Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited) | ​ | 5
​ | ​ | ​ | ​
​ | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (unaudited) | ​ | 6
​ | ​ | ​ | ​
​ | Notes to Unaudited Condensed Consolidated Financial Statements | ​ | 8
​ | ​ | ​ | ​
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ​ | 26
​ | ​ | ​ | ​
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ​ | 32
​ | ​ | ​ | ​
Item 4. | Controls and Procedures | ​ | 33
​ | ​ | ​ | ​
PART II. | Other Information | ​ | 34
​ | ​ | ​ | ​
Item 1. | Legal Proceedings | ​ | 34
​ | ​ | ​ | ​
Item 1A. | Risk Factors | ​ | 34
​ | ​ | ​ | ​
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ​ | 36
​ | ​ | ​ | ​
Item 3. | Defaults Upon Senior Securities | ​ | 36
​ | ​ | ​ | ​
Item 4. | Mine Safety Disclosures | ​ | 36
​ | ​ | ​ | ​
Item 5. | Other Information | ​ | 36
​ | ​ | ​ | ​
Item 6. | Exhibits | ​ | 37
​ | ​ | ​ | ​
Signatures | ​ | ​ | 38

​

​

​

2

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

PRECIPIO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | (unaudited) | ​ | ​
​ |  | September 30, 2025 |  | December 31, 2024
ASSETS | ​ | ​ | ​ | ​ | ​ | ​
CURRENT ASSETS: | ​ | ​ | ​ | ​ | ​ | ​
Cash | ​ | $ | 2,305 | ​ | $ | 1,389
Accounts receivable (net of allowance for credit losses of $1,050 and $995, respectively) | ​ |  | 1,957 | ​ | ​ | 799
Inventories | ​ |  | 788 | ​ | ​ | 724
Other current assets | ​ |  | 618 | ​ | ​ | 539
Total current assets | ​ |  | 5,668 | ​ | ​ | 3,451
​ | ​ | ​ | ​ | ​ | ​ | ​
PROPERTY AND EQUIPMENT, NET | ​ |  | 771 | ​ | ​ | 719
​ | ​ | ​ | ​ | ​ | ​ | ​
OTHER ASSETS: | ​ | ​ | ​ | ​ | ​ | ​
Finance lease right-of-use assets, net | ​ | ​ | 1,059 | ​ | ​ | 517
Operating lease right-of-use assets, net | ​ | ​ | 2,431 | ​ | ​ | 395
Intangibles, net | ​ |  | 11,157 | ​ | ​ | 11,869
Other assets | ​ |  | 67 | ​ | ​ | 45
Total assets | ​ | $ | 21,153 | ​ | $ | 16,996
LIABILITIES AND STOCKHOLDERS’ EQUITY | ​ | ​ | ​ | ​ | ​ | ​
CURRENT LIABILITIES: | ​ | ​ | ​ | ​ | ​ | ​
Current maturities of long-term debt, less debt issuance costs | ​ | $ | 30 | ​ | $ | 297
Current maturities of finance lease liabilities | ​ |  | 215 | ​ | ​ | 124
Current maturities of operating lease liabilities | ​ |  | 366 | ​ | ​ | 201
Accounts payable | ​ |  | 1,138 | ​ | ​ | 618
Accrued expenses | ​ |  | 2,428 | ​ | ​ | 2,799
Deferred revenue | ​ |  | 276 | ​ | ​ | 232
Total current liabilities | ​ |  | 4,453 | ​ | ​ | 4,271
LONG TERM LIABILITIES: | ​ | ​ | ​ | ​ | ​ | ​
Long-term debt, less current maturities and debt issuance costs | ​ |  | 55 | ​ | ​ | 77
Finance lease liabilities, less current maturities | ​ |  | 799 | ​ | ​ | 348
Operating lease liabilities, less current maturities | ​ |  | 2,097 | ​ | ​ | 206
Total liabilities | ​ |  | 7,404 | ​ | ​ | 4,902
COMMITMENTS AND CONTINGENCIES (Note 5) | ​ | ​ | ​ | ​ | ​ | ​
STOCKHOLDERS’ EQUITY: | ​ | ​ | ​ | ​ | ​ | ​
Preferred stock - $0.01 par value, 15,000,000 shares authorized at September 30, 2025 and December 31, 2024, 47 shares issued and outstanding at September 30, 2025 and December 31, 2024, liquidation preference of $105 at September 30, 2025 | ​ |  | — | ​ | ​ | —
Common stock, $0.01 par value, 150,000,000 shares authorized at September 30, 2025 and December 31, 2024, 1,745,887 and 1,493,639 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively | ​ |  | 17 | ​ | ​ | 15
Additional paid-in capital | ​ |  | 117,061 | ​ | ​ | 114,519
Accumulated deficit | ​ |  | (103,329) | ​ | ​ | (102,440)
Total stockholders’ equity | ​ | ​ | 13,749 | ​ | ​ | 12,094
Total liabilities and stockholders’ equity | ​ | $ | 21,153 | ​ | $ | 16,996

​

​

​

See notes to unaudited condensed consolidated financial statements.

​

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PRECIPIO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(unaudited)

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended September 30, | ​ | Nine Months Ended September 30,
​ |  | 2025 |  | 2024 | ​ | 2025 |  | 2024
SALES: |  | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |
Service revenue, net | ​ | $ | 6,164 | ​ | $ | 4,599 | ​ | $ | 15,426 | ​ | $ | 11,329
Product revenue | ​ |  | 721 | ​ |  | 681 | ​ |  | 1,999 | ​ |  | 1,936
Revenue, net of contractual allowances and adjustments | ​ |  | 6,885 | ​ |  | 5,280 | ​ |  | 17,425 | ​ |  | 13,265
Adjustment for allowance for credit losses | ​ |  | (118) | ​ |  | (71) | ​ |  | (75) | ​ |  | (183)
Net sales | ​ |  | 6,767 | ​ |  | 5,209 | ​ |  | 17,350 | ​ |  | 13,082
COST OF SALES: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Cost of service revenue | ​ |  | 3,260 | ​ |  | 2,579 | ​ |  | 8,599 | ​ |  | 7,105
Cost of product revenue | ​ |  | 502 | ​ |  | 353 | ​ |  | 1,177 | ​ |  | 1,064
Total cost of sales | ​ |  | 3,762 | ​ |  | 2,932 | ​ |  | 9,776 | ​ |  | 8,169
Gross profit | ​ |  | 3,005 | ​ |  | 2,277 | ​ |  | 7,574 | ​ |  | 4,913
OPERATING EXPENSES: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Operating expenses | ​ |  | 3,066 | ​ |  | 2,874 | ​ |  | 9,318 | ​ |  | 8,793
OPERATING LOSS | ​ |  | (61) | ​ |  | (597) | ​ |  | (1,744) | ​ |  | (3,880)
OTHER INCOME (EXPENSE): | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Interest expense, net | ​ |  | (9) | ​ |  | (29) | ​ |  | (57) | ​ |  | (45)
Gain on settlement of liability | ​ |  | – | ​ |  | – | ​ |  | 143 | ​ |  | —
Employee Retention Credit | ​ | ​ | – | ​ | ​ | – | ​ | ​ | 789 | ​ | ​ | —
Other expense | ​ |  | (9) | ​ |  | – | ​ |  | (20) | ​ |  | —
Total other (expense) income | ​ |  | (18) | ​ |  | (29) | ​ |  | 855 | ​ |  | (45)
LOSS BEFORE INCOME TAXES | ​ |  | (79) | ​ |  | (626) | ​ |  | (889) | ​ |  | (3,925)
INCOME TAX EXPENSE | ​ |  | – | ​ |  | – | ​ |  | – | ​ |  | —
NET LOSS | ​ | $ | (79) | ​ | $ | (626) | ​ | $ | (889) | ​ | $ | (3,925)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net loss per common share: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
BASIC AND DILUTED LOSS PER COMMON SHARE | ​ | $ | (0.05) | ​ | $ | (0.42) | ​ | $ | (0.57) | ​ | $ | (2.69)
BASIC AND DILUTED WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING | ​ |  | 1,637,486 | ​ |  | 1,480,217 | ​ |  | 1,552,024 | ​ |  | 1,456,653

​

​

See notes to unaudited condensed consolidated financial statements.

​

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PRECIPIO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands)

(unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended September 30, 2025
​ | ​ | Preferred Stock | ​ | Common Stock | ​ | Additional | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Outstanding | ​ | Par |  | Outstanding |  | Par | ​ | Paid-in | ​ | Accumulated | ​ | ​
​ |  | Shares |  | Value |  | Shares |  | Value |  | Capital |  | Deficit |  | Total
Balance, July 1, 2025 |  | 47 | ​ | $ | — |  | 1,516,296 | ​ | $ | 15 | ​ | $ | 115,523 | ​ | $ | (103,250) | ​ | $ | 12,288
Net loss | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (79) | ​ | ​ | (79)
Proceeds upon issuance of common stock from exercise of warrants | ​ | — | ​ | ​ | — | ​ | 226,303 | ​ | ​ | 2 | ​ | ​ | 1,258 | ​ | ​ | — | ​ | ​ | 1,260
Issuance of common stock for Board fees and consulting services | ​ | — | ​ | ​ | — | ​ | 3,288 | ​ | ​ | — | ​ | ​ | 48 | ​ | ​ | — | ​ | ​ | 48
Stock-based compensation | ​ | — | ​ |  | — |  | — | ​ |  | — | ​ |  | 232 | ​ |  | — | ​ |  | 232
Balance, September 30, 2025 | ​ | 47 | ​ | $ | — | ​ | 1,745,887 | ​ | $ | 17 | ​ | $ | 117,061 | ​ | $ | (103,329) | ​ | $ | 13,749
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months Ended September 30, 2025
​ | ​ | Preferred Stock | ​ | Common Stock | ​ | Additional | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Outstanding | ​ | Par |  | Outstanding |  | Par | ​ | Paid-in | ​ | Accumulated | ​ | ​
​ | ​ | Shares |  | Value |  | Shares |  | Value |  | Capital |  | Deficit |  | Total
Balance, January 1, 2025 | ​ | 47 | ​ | $ | — |  | 1,493,639 | ​ | $ | 15 | ​ | $ | 114,519 | ​ | $ | (102,440) | ​ | $ | 12,094
Net loss |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | — | ​ |  | (889) | ​ |  | (889)
Proceeds upon issuance of common stock from exercise of warrants | ​ | — | ​ | ​ | — | ​ | 226,303 | ​ | ​ | 2 | ​ | ​ | 1,258 | ​ | ​ | — | ​ | ​ | 1,260
Issuance of common stock for Board fees and consulting services | ​ | — | ​ | ​ | — | ​ | 25,945 | ​ | ​ | — | ​ | ​ | 180 | ​ | ​ | — | ​ | ​ | 180
Stock-based compensation |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | 1,104 | ​ |  | — | ​ |  | 1,104
Balance, September 30, 2025 |  | 47 | ​ | $ | — | ​ | 1,745,887 | ​ | $ | 17 | ​ | $ | 117,061 | ​ | $ | (103,329) | ​ | $ | 13,749

​

​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended September 30, 2024
​ | ​ | Preferred Stock | ​ | Common Stock | ​ | Additional | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Outstanding | ​ | Par |  | Outstanding |  | Par | ​ | Paid-in | ​ | Accumulated | ​ | ​
​ |  | Shares |  | Value |  | Shares |  | Value |  | Capital |  | Deficit |  | Total
Balance, July 1, 2024 | ​ | 47 | ​ | $ | — | ​ | 1,469,540 | ​ | $ | 14 | ​ | $ | 113,550 | ​ | $ | (101,449) | ​ | $ | 12,115
Net loss |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | — | ​ |  | (626) | ​ |  | (626)
Issuance of common stock for Board fees and consulting services | ​ | — | ​ | ​ | — | ​ | 12,593 | ​ | ​ | 1 | ​ | ​ | 57 | ​ | ​ | — | ​ | ​ | 58
Stock-based compensation |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | 398 | ​ |  | — | ​ |  | 398
Balance, September 30, 2024 |  | 47 | ​ | $ | — |  | 1,482,133 | ​ | $ | 15 | ​ | $ | 114,005 | ​ | $ | (102,075) | ​ | $ | 11,945
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months Ended September 30, 2024
​ | ​ | Preferred Stock | ​ | Common Stock | ​ | Additional | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Outstanding | ​ | Par |  | Outstanding |  | Par | ​ | Paid-in | ​ | Accumulated | ​ | ​
​ | ​ | Shares |  | Value |  | Shares |  | Value |  | Capital |  | Deficit |  | Total
Balance, January 1, 2024 | ​ | 47 | ​ | $ | — | ​ | 1,420,125 | ​ | $ | 14 | ​ | $ | 112,565 | ​ | $ | (98,150) | ​ | $ | 14,429
Net loss |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | — | ​ |  | (3,925) | ​ |  | (3,925)
Issuance of common stock in connection with at the market offering, net of issuance costs | ​ | — | ​ | ​ | — | ​ | 11,822 | ​ | ​ | — | ​ | ​ | 78 | ​ | ​ | — | ​ | ​ | 78
Issuance of common stock for Board fees and consulting services |  | — | ​ |  | — |  | 50,186 | ​ |  | 1 | ​ |  | 308 | ​ |  | — | ​ |  | 309
Stock-based compensation |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | 1,054 | ​ |  | — | ​ |  | 1,054
Balance, September 30, 2024 |  | 47 | ​ | $ | — |  | 1,482,133 | ​ | $ | 15 | ​ | $ | 114,005 | ​ | $ | (102,075) | ​ | $ | 11,945

​

See notes to unaudited condensed consolidated financial statements.

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PRECIPIO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine Months Ended September 30,
​ |  | 2025 |  | 2024
CASH FLOWS FROM OPERATING ACTIVITIES: | ​ | ​ | ​ | ​ | ​ | ​
Net loss | ​ | $ | (889) | ​ | $ | (3,925)
​ | ​ | ​ | ​ | ​ | ​ | ​
Adjustments to reconcile net loss to net cash flows used in operating activities: | ​ |  |  | ​ |  |
Depreciation and amortization | ​ |  | 938 | ​ |  | 900
Amortization of operating lease right-of-use asset | ​ | ​ | 211 | ​ | ​ | 165
Amortization of finance lease right-of-use asset | ​ | ​ | 127 | ​ | ​ | 66
Amortization of deferred financing costs, debt discounts and debt premiums | ​ |  | 2 | ​ |  | 2
Gain on settlement of liability | ​ |  | (143) | ​ |  | —
Stock-based compensation | ​ |  | 1,104 | ​ |  | 1,054
Value of stock issued in payment of Board fees and consulting services | ​ |  | 180 | ​ |  | 309
Provision for credit losses | ​ |  | 55 | ​ |  | 183
Derecognition of finance lease right-of-use asset and liability | ​ | ​ | (4) | ​ | ​ | —
Derecognition of operating lease right-of-use asset and liability | ​ | ​ | (38) | ​ | ​ | —
Loss on disposal of asset | ​ | ​ | 20 | ​ | ​ | —
Changes in operating assets and liabilities: | ​ |  |  | ​ |  |
Accounts receivable | ​ |  | (1,213) | ​ |  | 97
Inventories | ​ |  | (64) | ​ |  | (206)
Other assets | ​ |  | (101) | ​ |  | 249
Accounts payable | ​ |  | 473 | ​ |  | 55
Operating lease liabilities | ​ | ​ | (152) | ​ | ​ | (166)
Deferred revenue | ​ | ​ | 44 | ​ | ​ | 172
Accrued expenses | ​ |  | (231) | ​ |  | 919
Net cash provided by (used in) operating activities | ​ |  | 319 | ​ |  | (126)
CASH FLOWS FROM INVESTING ACTIVITIES: | ​ |  |  | ​ |  | ​
Purchase of property and equipment | ​ |  | (251) | ​ |  | (179)
Net cash used in investing activities | ​ |  | (251) | ​ |  | (179)
CASH FLOWS FROM FINANCING ACTIVITIES: | ​ |  |  | ​ |  |
Principal payments on finance lease obligations | ​ |  | (103) | ​ |  | (62)
Deposits on finance lease right-of-use assets | ​ | ​ | (20) | ​ | ​ | (28)
Issuance of common stock, net of issuance costs | ​ | ​ | — | ​ | ​ | 78
Proceeds from exercise of warrants | ​ |  | 1,260 | ​ |  | —
Proceeds from debt | ​ |  | — | ​ |  | 250
Principal payments on long-term debt | ​ |  | (289) | ​ |  | (382)
Net cash flows provided by (used in) financing activities | ​ |  | 848 | ​ |  | (144)
NET CHANGE IN CASH | ​ |  | 916 | ​ |  | (449)
CASH AT BEGINNING OF PERIOD | ​ |  | 1,389 | ​ |  | 1,502
CASH AT END OF PERIOD | ​ | $ | 2,305 | ​ | $ | 1,053
​ | ​ | ​ | ​ | ​ | ​ | ​

​

See notes to unaudited condensed consolidated financial statements.

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PRECIPIO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS- CONTINUED

(Dollars in thousands)

(unaudited)

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine Months Ended September 30,
​ | ​ | 2025 |  | 2024
SUPPLEMENTAL CASH FLOW INFORMATION | ​ | ​ | ​ | ​ | ​ | ​
Cash paid during the period for interest | ​ | $ | 72 | ​ | $ | 54
​ | ​ | ​ | ​ | ​ | ​ | ​
SUPPLEMENTAL DISCLOSURE OF CONSULTING SERVICES OR ANY OTHER NON-CASH COMMON STOCK RELATED ACTIVITY | ​ |  |  | ​ |  |
Purchases of equipment financed through accounts payable | ​ | ​ | 47 | ​ | ​ | 24
Prepaid insurance financed with loan | ​ | ​ | — | ​ | ​ | 317
Operating lease right-of-use assets obtained in exchange for operating lease obligations | ​ | ​ | 2,248 | ​ | ​ | —
Finance lease right-of-use assets obtained in exchange for finance lease obligations | ​ | ​ | 649 | ​ | ​ | 205

​

See notes to unaudited condensed consolidated financial statements.

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PRECIPIO, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2025 and 2024

1. BUSINESS DESCRIPTION

Business Description.

Precipio, Inc., and its subsidiaries, (collectively, “we”, “us”, “our”, the “Company” or “Precipio”) is a healthcare biotechnology company focused on cancer diagnostics. Our 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. 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. 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, respectively, which house teams that collaborate on the development of new products and services. We operate clinical laboratory improvement amendment (“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. 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. 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. 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. 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. 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. 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, informed support to customers, improving their experience with our products.

​

Our Products Division commercial team generates direct sales and works with our key distributors. 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.

Going Concern.

The condensed 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 the Company will realize its assets and discharge its liabilities in the ordinary course of business and do not include any adjustments that might result should the Company be unable to continue as a going concern. The Company has incurred substantial operating losses and has typically used cash in its operating activities for the past several years. For the nine months ended

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September 30, 2025, the Company had an operating loss of $1.7 million and net cash provided by operating activities of $0.3 million. As of September 30, 2025, the Company had an accumulated deficit of $103.3 million and working capital of $1.2 million. The Company’s ability to continue as a going concern over the next twelve months from the date of issuance of these condensed consolidated financial statements in this Quarterly Report on Form 10-Q 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.

To meet its current and future obligations the Company has taken the following steps to capitalize its business:

| ● | During the three months ended September 30, 2025, the Company received proceeds of approximately $1.3 million from the exercise of 100,000 warrants. As of September 30, 2025, the Company still has 31,944 warrants outstanding. However, there is no guarantee that the Company will receive future proceeds from the outstanding warrants as they may never be exercised or they may be exercised in a cashless manner. See Note 7 – “Stockholders’ Equity, Common Stock Warrants,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion.

​

Notwithstanding the aforementioned circumstances, there remains substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these condensed consolidated financial statements were issued. There can be no assurance that the Company will be able to successfully achieve its initiatives summarized above in order to continue as a going concern over the next twelve months from the date of issuance of this Quarterly Report on Form 10-Q.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation.

The accompanying condensed consolidated financial statements are presented in conformity with GAAP and, as of September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024, are unaudited and reflect all adjustments (consisting of only normal recurring adjustments) that are necessary for a fair presentation of the financial position and operating results for the interim periods. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2024 contained in our Annual Report on Form 10-K, filed with the SEC on March 27, 2025. The results of operations for the interim periods presented are not necessarily indicative of the results for fiscal year 2025.

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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. ASU 2023-09 requires additional disaggregation of the reconciliation between the statutory and effective tax rate for an entity and of income taxes paid, both of which are disclosures required by current GAAP. The amendments improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The amendments in ASU 2023-09 apply to all entities that are subject to Topic 740, Income Taxes. For public business entities, the amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The enhanced disclosures required by ASU 2023-09 will be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The Company is currently evaluating the impact of this standard on its annual disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures (ASU 2024-03”). 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. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, including those assets acquired in a business combination. The practical expedient permits all entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which eliminates the previous stage-based model for capitalizing software costs and replaces it with a principles-based framework. This new guidance is designed to be more adaptable to modern, agile software development methods, clarifying when an entity should capitalize software costs based on a “probable-to-complete” threshold. This ASU is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, and may be applied using a prospective, modified, or retrospective transition approach. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

Loss Per Share.

Basic net income (loss) per share is calculated based on the weighted-average number of common shares outstanding during each period. Diluted net income (loss) per share includes shares issuable upon exercise of outstanding stock options, warrants or conversion rights that have exercise or conversion prices below the market value of our common stock using the treasury stock method, unless their effect is antidilutive. Options, warrants and conversion rights pertaining to 411,726 and 753,752 shares of our common stock have been excluded from the computation of diluted loss per share at September 30, 2025 and 2024, respectively, because the effect is anti-dilutive due to the net loss.

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The following table summarizes the outstanding securities not included in the computation of diluted net loss per share:

​

​ | ​ | ​ | ​ | ​
​ | ​ | September 30,
​ |  | 2025 |  | 2024
Stock options |  | 373,907 |  | 303,433
Warrants |  | 31,944 |  | 444,444
Preferred stock |  | 5,875 |  | 5,875
Total |  | 411,726 |  | 753,752

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3. LONG-TERM DEBT

Long-term debt consists of the following:

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Dollars in Thousands
​ |  | September 30, 2025 |  | December 31, 2024
Connecticut Department of Economic and Community Development (DECD) | ​ | $ | 92 | ​ | $ | 115
DECD debt issuance costs | ​ |  | (7) | ​ |  | (9)
Financed insurance loan | ​ |  | — | ​ |  | 177
Business loan agreement | ​ | ​ | — | ​ | ​ | 91
Total long-term debt | ​ |  | 85 | ​ |  | 374
Current portion of long-term debt | ​ |  | (30) | ​ |  | (297)
Long-term debt, net of current maturities | ​ | $ | 55 | ​ | $ | 77

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Department of Economic and Community Development.

On January 8, 2018, the Company entered into an agreement with the Connecticut Department of Economic and Community Development (“DECD”) by which the Company received a loan of $300,000 secured by substantially all of the Company’s assets (the “DECD 2018 Loan”). The DECD 2018 Loan is a ten-year loan due on December 31, 2027 and includes interest paid monthly at 3.25%. The maturity date of the DECD 2018 Loan was extended to May 31, 2028 and the modification did not have a material impact on the Company’s cash flows.

Amortization of the debt issuance costs were less than $1 thousand for the three months ended September 30, 2025 and 2024, respectively, and $2 thousand for the nine months ended September 30, 2025 and 2024, respectively.

Financed Insurance Loan.

The Company finances certain of its insurance premiums (the “Financed Insurance Loans”). In July 2024, the Company financed $0.3 million with a 9.99% interest rate and made payments on a monthly basis through June 2025. As of September 30, 2025 and December 31, 2024, the Financed Insurance Loan’s outstanding balance of zero and $0.2 million, respectively, was included in current maturities of long-term debt in the Company’s condensed consolidated balance sheets. A corresponding prepaid asset was included in other current assets in the Company’s condensed consolidated balance sheets.

Business Loan Agreement.

On May 1, 2024, the Company entered into a Business Loan and Security Agreement (the “Loan Agreement”) with Altbanq Lending LLC, pursuant to which the Company obtained a loan in the principal amount of $250,000 (the “Secured Loan”). According to the Loan Agreement, the Company granted the lender a continuing security interest in certain collateral (as defined in the Loan Agreement). Furthermore, the Company’s Chief Executive Officer provided a personal guaranty for the Secured Loan. The Secured Loan has a term of one year and an interest rate of 20%, such that

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pursuant to the Loan Agreement, the Company is obligated to pay the Lender 52 payments of $5,769 on a weekly basis and the total sum of the Secured Loan and interest (not including any fees) is equal to a total repayment amount of $300,000 (the “Repayment Amount”). If the Company defaulted on payments then a default fee of $15,000 shall be payable to the lender. As of the date hereof, the Repayment Amount was paid in full and the Company did not default on any payments.

As of September 30, 2025 and December 31, 2024, the outstanding balance of zero and $0.1 million, respectively, under the Loan Agreement, was included in current maturities of long-term debt in the Company’s condensed consolidated balance sheets.

​

​

4. ACCRUED EXPENSES

Accrued expenses at September 30, 2025 and December 31, 2024 are as follows:

​ | ​ | ​ | ​ | ​ | ​ | ​
(dollars in thousands) |  | September 30, 2025 |  | December 31, 2024
Accrued expenses | ​ | $ | 477 | ​ | $ | 595
Accrued compensation | ​ |  | 1,419 | ​ |  | 955
Accrued franchise, property and sales and use taxes | ​ | ​ | 180 | ​ | ​ | 173
CHC temporary funding assistance | ​ | ​ | 333 | ​ | ​ | 1,057
Accrued interest | ​ |  | 19 | ​ |  | 19
​ | ​ | $ | 2,428 | ​ | $ | 2,799

​

The Company uses Change Healthcare (“CHC”), a healthcare technology company owned by UnitedHealth Group, to process some of its patient claims billings. In February 2024, CHC announced that it had experienced a cyberattack and as a result had to temporarily shut down some of its information technology systems. This system shut down caused delays in billing and reimbursement processes to CHC’s customers and, as a result, CHC established a Temporary Funding Assistance Program to help bridge the gap in short-term cash flow needs for customers affected by the disruption of its services due to the cyberattack. Funding distributed through this program is interest free and has no other fees or costs associated with it.

During the year ended December 31, 2024, the Company received approximately $1.1 million through CHC’s Temporary Assistance Program. On October 28, 2024, the Company received a notice from CHC stating that they have restored the connectivity of their systems and are requesting repayment of the funds the Company received through the Temporary Assistance Program. The repayment date contained in the notice was January 2, 2025.

During the nine months ended September 30, 2025, we made approximately $0.6 million in repayments to CHC and wrote off another $0.1 million, leaving a balance of approximately $0.3 million. The Company will make equal monthly payments of approximately $83,000 through January 2026 to settle this balance.

5. COMMITMENTS AND CONTINGENCIES

The Company is involved in legal proceedings related to matters, which are incidental to its business. Also, the Company 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.

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PURCHASE COMMITMENTS

The Company has entered into purchase commitments for reagents from suppliers. These agreements started in 2011 and run through 2031. The Company and the suppliers will true up the amounts on an annual basis. The future minimum purchase commitments under these and other purchase agreements are approximately $1.9 million at September 30, 2025.

LEGAL PROCEEDINGS

CPA Global provides us with certain patent management services. On February 6, 2017, CPA Global claimed that we owed approximately $0.2 million for certain patent maintenance services rendered. CPA Global has not filed claims against us in connection with this allegation. A liability of less than $0.1 million has been recorded and is reflected in accounts payable within the accompanying condensed consolidated balance sheets at September 30, 2025 and December 31, 2024.

As previously disclosed, the Company was involved in a legal proceeding brought by a former employee before the court in San Antonio, Texas, alleging unfair dismissal and seeking monetary damages. The matter has since been resolved through a settlement agreement. The settlement was reached without any admission of liability and is not material to the Company’s financial statements. Accordingly, the matter is considered closed.

LEGAL AND REGULATORY ENVIRONMENT

The healthcare industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirement, reimbursement for patient services and Medicare and Medicaid fraud and abuse. Government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers.

Violations of these laws and regulations could result in expulsion from government healthcare programs together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Management believes that the Company is in compliance with fraud and abuse regulations, as well as other applicable government laws and regulations. While no material regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time.

6. LEASES

The Company leases administrative facilities and laboratory equipment through operating lease agreements. In addition, we rent various equipment used in our diagnostic lab and in our administrative offices through finance lease arrangements. Our operating leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common area or other maintenance costs). The facility leases include one or more options to renew, from 1 to 5 years or more. The exercise of lease renewal options is typically at our sole discretion, therefore, the renewals to extend the lease terms are not included in our right-of-use (“ROU”) assets and lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and, when they are reasonably certain of exercise, we include the renewal period in our lease term. As our leases do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The primary leases we enter into with initial terms of 12 months or less are for equipment.

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The Company also recognizes ROU assets from finance leases in connection with its HemeScreen Reagent Rental (“HSRR”) program and from finance leases for laboratory equipment. For certain customers in the HSRR program, the Company leases diagnostic testing equipment and then subleases the equipment to the customer. Finance lease ROU assets and finance lease liabilities are recognized at the lease commencement date, and at the sublease commencement date the finance lease ROU asset is derecognized and is recorded as cost of sales in the condensed consolidated statements of operations. Derecognized finance lease ROU assets for the three and nine months ended
September 30, 2025 were zero and $4 thousand, respectively. There were no derecognized finance lease ROU assets for the three and nine months ended September 30, 2024. Where Precipio is the lessor, customers lease diagnostic testing equipment from the Company with the transfer of ownership to the customer at the end of the lease term at no additional cost. For these contracts, the Company accounts for the arrangements as sales-type leases. The lease asset for sales-type leases is the net investment in leased asset, which is recorded once the finance lease ROU asset is derecognized and a related gain or loss is noted. The net investment in leased assets was less than $0.1 million as of September 30, 2025 and December 31, 2024, respectively, and is included in other current assets and other assets in our condensed consolidated balance sheets.

The balance sheet presentation of our operating and finance leases is as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
(dollars in thousands) | ​ | ​ | ​ | ​ | ​ | ​
Classification on the Condensed Consolidated Balance Sheet | ​ | September 30, 2025 | ​ | December 31, 2024
Assets: | ​ | ​ | ​ | ​ | ​ | ​
Operating lease right-of-use assets, net | ​ | $ | 2,431 | ​ | $ | 395
Finance lease right-of-use assets, net | ​ | ​ | 1,059 | ​ | ​ | 517
Total lease assets | ​ | $ | 3,490 | ​ | $ | 912
​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities: | ​ | ​ | ​ | ​ | ​ | ​
Current: | ​ | ​ | ​ | ​ | ​ | ​
Current maturities of operating lease liabilities | ​ | $ | 366 | ​ | $ | 201
Current maturities of finance lease liabilities | ​ | ​ | 215 | ​ | ​ | 124
Noncurrent: | ​ | ​ | ​ | ​ | ​ | ​
Operating lease liabilities, less current maturities | ​ | ​ | 2,097 | ​ | ​ | 206
Finance lease liabilities, less current maturities | ​ | ​ | 799 | ​ | ​ | 348
Total lease liabilities | ​ | $ | 3,477 | ​ | $ | 879

​

As of September 30, 2025, the estimated future minimum lease payments, excluding non-lease components, are as follows:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(dollars in thousands) |  | Operating Leases | ​ | Finance Leases | ​ | Total
​ | ​ | ​ | September 30, | ​ | ​ | September 30, | ​ | ​ | September 30,
​ | ​ | ​ | 2025 | ​ | ​ | 2025 | ​ | ​ | 2025
2025 (remaining) | ​ | $ | 146 | ​ | $ | 81 | ​ | $ | 227
2026 | ​ |  | 594 | ​ |  | 300 | ​ |  | 894
2027 | ​ |  | 648 | ​ |  | 274 | ​ |  | 922
2028 | ​ |  | 691 | ​ | ​ | 234 | ​ |  | 925
2029 | ​ | ​ | 734 | ​ | ​ | 186 | ​ | ​ | 920
Thereafter | ​ |  | 290 | ​ |  | 207 | ​ |  | 497
Total lease obligations | ​ |  | 3,103 | ​ |  | 1,282 | ​ |  | 4,385
Less: Amount representing interest | ​ |  | (640) | ​ |  | (268) | ​ |  | (908)
Present value of net minimum lease obligations | ​ |  | 2,463 | ​ |  | 1,014 | ​ |  | 3,477
Less, current portion | ​ |  | (366) | ​ |  | (215) | ​ |  | (581)
Long term portion | ​ | $ | 2,097 | ​ | $ | 799 | ​ | $ | 2,896

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Other information as of September 30, 2025 and December 31, 2024 is as follows:

​

​ | ​ | ​ | ​
​ | September 30, | ​ | December 31,
​ | 2025 | ​ | 2024
Weighted-average remaining lease term (years): | ​ | ​ | ​
Operating leases | 4.7 | ​ | 1.9
Finance leases | 4.7 | ​ | 4.4
Weighted-average discount rate: | ​ | ​ | ​
Operating leases | 10.00% | ​ | 8.00%
Finance leases | 10.75% | ​ | 11.20%

​

During each of the nine months ended September 30, 2025 and 2024, operating cash flows from operating leases was $0.2 million, and operating lease ROU assets obtained in exchange for operating lease liabilities were $2.2 million and zero, respectively.

During the nine months ended September 30, 2025 and 2024, finance lease ROU assets obtained in exchange for finance lease liabilities were $0.6 million and $0.2 million, respectively.

Operating Lease Costs

Operating lease costs were approximately $0.1 million and $0.2 million during both the three and nine months ended September 30, 2025 and 2024, respectively. These costs are primarily related to long-term operating leases for the Company’s facilities and laboratory equipment. Short-term and variable lease costs were less than $0.1 million for the three and nine months ended September 30, 2025 and 2024, respectively.

Finance Lease Costs

Finance lease amortization and interest expenses are $0.1 million and $0.2 million for the three and nine months ended September 30, 2025 and 2024, respectively. The balances within these accounts are included in the condensed consolidated statements of operations.

​

​

7. STOCKHOLDERS’ EQUITY

Common Stock.

Pursuant to our Third Amended and Restated Certificate of Incorporation, as amended, we currently have 150,000,000 shares of common stock authorized for issuance. On December 20, 2018, the Company’s shareholders approved the proposal to authorize the Company’s Board of Directors (the “Board”) to, in its discretion, amend the Company’s Third Amended and Restated Certificate of Incorporation to increase the total number of authorized shares of common stock from 150,000,000 shares to 250,000,000 shares. The Company has not yet implemented this increase.

During the three and nine months ended September 30, 2025, the Company issued 3,288 and 25,945 shares of its common stock, respectively, in connection with Board fees of less than $0.1 million and $0.2 million, respectively.

At The Market Offering Agreement

​

AGP 2023 Sales Agreement

​

On April 14, 2023, the Company entered into the AGP 2023 Sales Agreement with AGP, in an “at the market offering” (as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended) of the shares of common stock. AGP

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will be entitled to a commission at a fixed rate of 3.0% of the gross proceeds from each sale of shares of common stock pursuant to the AGP 2023 Sales Agreement.

​

The sales of our shares of common stock to or through AGP, pursuant to the AGP 2023 Sales Agreement, are made pursuant to the 2023 Registration Statement on Form S-3 (File No. 333-271277), filed by the Company with the SEC on April 14, 2023, as amended by Amendment No. 1 filed by the Company with the SEC on April 25, 2023, and declared effective on April 27, 2023, for an aggregate offering price of up to $5.8 million.

​

On April 8, 2024, we filed a prospectus supplement (the “April 2024 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.

​

During the three and nine months ended September 30, 2025, there were no sales of common stock pursuant to the AGP 2023 Sales Agreement. During the three and nine months ended September 30, 2024, we received net proceeds of zero and $0.1 million, respectively, from the sale of zero and 11,822 shares of common stock, respectively, pursuant to the AGP 2023 Sales Agreement.

​

The Company terminated the AGP 2023 Sales Agreement effective September 2, 2025. Following the termination of the AGP 2023 Sales Agreement, the Company may not offer or sell any additional shares of common stock under the AGP 2023 Sales Agreement. As of the date of issuance of this Quarterly Report on Form 10-Q, we have received an aggregate of $0.1 million in net proceeds, after issuance costs of approximately $2 thousand, from the sales of 11,847 shares of common stock through AGP.

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Preferred Stock.

The Board is authorized to issue up to 15,000,000 shares of preferred stock in one or more series, from time to time, with such designations, powers, preferences and rights and such qualifications, limitations and restrictions as may be provided in a resolution or resolutions adopted by the Board.

Series B Preferred Stock.

The Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (“Series B Preferred Stock”) with the State of Delaware, which designates 6,900 shares of our preferred stock as Series B Preferred Stock. The Series B Preferred Stock has a stated value of $1 thousand per share and a par value of $0.01 per share. The Series B Preferred Stock includes a beneficial ownership blocker but has no dividend rights (except to the extent dividends are also paid on the common stock). On August 28, 2017, the Company completed an underwritten public offering consisting of the Company’s Series B Preferred Stock and warrants.

The conversion price of the Series B Preferred Stock contains a down round feature. The Company will recognize the effect of the down round feature when it is triggered. At that time, the effect would be treated as a deemed dividend and as a reduction of income available to common shareholders in our basic earnings per share calculation.

There were no conversions of Series B Preferred Stock during the three and nine months ended September 30, 2025 and 2024, respectively. At September 30, 2025 and December 31, 2024, the Company had 6,900 shares of Series B Preferred Stock designated and issued and 47 shares of Series B Preferred Stock outstanding. Based on the stated value of $1 thousand per share and a conversion price of $8.00 per share, the outstanding shares of Series B Preferred Stock at September 30, 2025 were convertible into 5,875 shares of common stock.

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Common Stock Warrants.

The following represents a summary of the warrants outstanding as of September 30, 2025:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | ​ |  | Underlying |  | Exercise
​ | ​ | Issue Year | ​ | Expiration | ​ | Shares | ​ | Price
Warrants | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(1) | ​ | 2023 | ​ | December 2028 | ​ | 31,944 | ​ | $ | 12.60

(1) These warrants were issued in connection with a June 8, 2023 registered direct offering (the “Registered Direct Offering”) and concurrent private placement and are the RDO Common Warrants discussed below.

​

No warrants expired during the three and nine months ended September 30, 2025.

During the three and nine months ended September 30, 2024, zero and 15,091 warrants expired, respectively. The warrants had been issued in connection with transactions that were completed in 2019.

RDO Common Warrants. In connection with the Registered Direct Offering and concurrent private placement in June 2023, the Company issued 444,444 warrants to purchase up to 444,444 shares of common stock (the “RDO Common Warrants”). The RDO Common Warrants are exercisable beginning six months after the date of issuance, have an exercise price of $12.60 per share, and will expire December 12, 2028.

During the three months ended September 30, 2025, the Company amended the warrant agreements with certain RDO Common Warrant holders giving the holders the right, at their discretion, to exercise their remaining outstanding warrants in a cashless manner.

During the three months ended September 30, 2025, 412,500 RDO Common Warrants were exercised for 226,303 shares of our common stock. The Company received net proceeds of approximately $1.3 million from these exercises. The intrinsic value of the warrants exercised during the three months ended September 30, 2025 was $3.0 million.

8. FAIR VALUE

FASB guidance on fair value measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements for our financial assets and liabilities, as well as for other assets and liabilities that are carried at fair value on a recurring basis in our condensed consolidated financial statements.

FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2—Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets; and

Level 3—Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.

Common Stock Warrant Liabilities.

Certain of our issued and outstanding warrants to purchase shares of common stock do not qualify to be treated as equity and, accordingly, are recorded as a liability. We are required to record these instruments at fair value at each reporting date and changes are recorded as a non-cash adjustment to earnings. The gains or losses included in earnings are reported in other income (expense) in our condensed consolidated statements of operations.

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Bridge Note Warrant Liabilities

During 2018 and 2019, the Company issued warrants in connection with the issuance of convertible notes. All of these warrants issuances were classified as warrant liabilities (the “Bridge Note Warrant Liabilities”).

The Bridge Note Warrant Liabilities are considered Level 3 financial instruments and were valued using the Black Scholes model. During the year ended December 31, 2024, the last remaining warrants related to Bridge Note Warrant Liabilities expired and thus at September 30, 2025 and December 31, 2024, there were no warrant liabilities to be valued.

During the three and nine months ended September 30, 2024, the changes in the fair value of the warrant liabilities measured using significant unobservable inputs (Level 3) were zero, respectively.

​

​

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9. EQUITY INCENTIVE PLAN

The Company currently issues stock awards under its 2017 Stock Option and Incentive Plan, as amended (the “2017 Plan”) which will expire on June 5, 2027. The shares authorized for issuance under the 2017 Plan were 395,380 at September 30, 2025, of which 18,912 were available for future grant. The shares authorized under the 2017 Plan are subject to annual increases on January 1 by 5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or such lessor number of shares determined by the Board or Compensation Committee of the Board. During the nine months ended September 30, 2025, the shares authorized for issuance increased by 74,681 shares.

Stock Options.

The Company accounts for all stock-based compensation payments to employees and directors, including grants of employee stock options, at fair value at the date of grant and expenses the benefit in operating expense in the condensed consolidated statements of operations over the service period of the awards. The Company records the expense for stock-based compensation awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable based on the expected satisfaction of the performance conditions as of the reporting date. The Company records the expense for stock-based compensation awards subject to market-condition vesting over a derived service period which is calculated at the grant date. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes or other option pricing models, which requires various assumptions including estimating stock price volatility, expected life of the stock option, risk free interest rate and estimated forfeiture rate.

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During the nine months ended September 30, 2025, the Company granted stock options to purchase up to 87,000 shares of common stock at a weighted average exercise price of $6.60 per share. The stock options granted have either time-based or market-condition vesting.

The awards with time-based vesting have vesting periods of up to four years and had grant date fair values between $5.24 and $10.67. The fair value was calculated using the Black-Scholes option pricing model and used the following assumptions: risk free interest rate of 4.02% to 4.65%, based on the U.S. Treasury yield in effect at the time of grant; expected life of five to six years; and volatility of 123% to 128% based on historical volatility of the Company’s common stock over a time that is consistent with the expected life of the option.

The awards with market-condition vesting have a derived service period of 1.6 years and had a grant date fair value of $5.70. The fair value was calculated using a Monte Carlo Simulation and used the following assumptions: risk free interest rate of 4.67%; remaining term of ten years; and volatility of 121%.

The following table summarizes stock option activity under our plans during the nine months ended September 30, 2025:

​ | ​ | ​ | ​ | ​ | ​
​ |  | Number of |  | Weighted-Average
​ | ​ | Options | ​ | Exercise Price
Outstanding at January 1, 2025 |  | 303,932 | ​ | $ | 7.18
Granted |  | 87,000 | ​ |  | 6.60
Forfeited |  | (17,025) | ​ |  | 6.31
Outstanding at September 30, 2025 |  | 373,907 | ​ | $ | 7.09
Exercisable at September 30, 2025 |  | 243,119 | ​ | $ | 7.32

​

As of September 30, 2025, there were 317,028 options that were vested or expected to vest with aggregate intrinsic value of $3.4 million and a remaining weighted average contractual life of 6.4 years.

Restricted Stock Awards.

Restricted stock awards are subject to vesting restrictions. If a grantee’s service with the Company is terminated prior to vesting of the restricted stock, all unvested shares shall be forfeited and returned to the Company. Upon vesting, the restricted stock award shall no longer be deemed restricted.

As of September 30, 2025 and December 31, 2024, there were 2,492 and zero restricted stock awards that were vested and unvested, respectively.

There were no restricted stock awards granted during the three and nine months ended September 30, 2025 and 2024, respectively.

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Stock Compensation.

For the three and nine months ended September 30, 2025, we recorded non-cash stock-based compensation expense for all stock awards of approximately $0.2 million and $1.1 million, respectively, within operating expense in the accompanying statements of operations. For the three and nine months ended September 30, 2024, we recorded non-cash stock-based compensation expense for all stock awards of $0.4 million and $1.1 million, respectively. As of September 30, 2025, the unrecognized compensation expense related to unvested stock awards was $0.7 million, which is expected to be recognized over a weighted-average period of 2.4 years.

10. SALES SERVICE REVENUE, NET AND ACCOUNTS RECEIVABLE

ASC Topic 606, “Revenue from contracts with customers”

The Company follows the guidance of ASC 606 for the recognition of revenue from contracts with customers to transfer goods and services. The Company performed a comprehensive review of its existing revenue arrangements following the five-step model:

​

Step 1: Identification of the contract with the customer. Sub-steps include determining the customer in a contract, initial contract identification and determining if multiple contracts should be combined and accounted for as a single transaction.

Step 2: Identify the performance obligation in the contract. Sub-steps include identifying the promised goods and services in the contract and identifying which performance obligations within the contract are distinct.

Step 3: Determine the transaction price. Sub-steps include variable consideration, constraining estimates of variable consideration, the existence of a significant financing component in the contract, noncash consideration and consideration payable to a customer.

Step 4: Allocate transaction price. Sub-steps include assessing the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods or services to the customer.

Step 5: Satisfaction of performance obligations. Sub-steps include ascertaining the point in time when an asset is transferred to the customer and when the customer obtains control of the asset upon which time the Company recognizes revenue.

​

Nature of Contracts and Customers

The Company’s contracts and related performance obligations are similar for its customers and the sales process for all customers starts upon the receipt of requisition forms from the customers for patient diagnostic testing and the execution of contracts for biomarker testing and clinical research. Payment terms for the services provided are 30 days, unless separately negotiated.

​

Diagnostic testing

​

Control of the laboratory testing services is transferred to the customer at a point in time. As such, the Company recognizes revenue for laboratory testing services at a point in time based on the delivery method (web-portal access or fax) for the patient’s laboratory report, per the contract.

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Clinical research grants

​

Control of the clinical research services are transferred to the customer over time. The Company will recognize revenue utilizing the “effort based” method, measuring its progress toward complete satisfaction of the performance obligation.

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Biomarker testing and clinical project services

Control of the biomarker testing and clinical project services are transferred to the customer over time. The Company utilizes an “effort based” method of assessing performance and measures progress towards satisfaction of the performance obligation based upon the delivery of results.

The Company generates revenue from the provision of diagnostic testing provided to patients, biomarker testing provided to bio-pharma customers and clinical research grants funded by both bio-pharma customers and government health programs.

Reagents and other diagnostic products

Control of reagents and other diagnostic products are transferred to the customer at a point in time and, as such, the Company recognizes these revenues at a point in time based on the delivery method. These revenues include revenues from reagent sets for our HSRR program and other product sales and are included in product revenue in our condensed consolidated statements of operations.

Disaggregation of Revenues by Transaction Type

We operate in one business segment and, therefore, the results of our operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. Service revenue, net for the three and nine months ended September 30, 2025 and 2024 was as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended September 30,
(dollars in thousands) | ​ | Diagnostic Testing
​ |  | 2025 |  | 2024
Medicaid | ​ | $ | 11 | ​ | $ | 8
Medicare | ​ |  | 2,788 | ​ |  | 1,819
Self-pay | ​ |  | 4 | ​ |  | 1
Third party payers | ​ |  | 3,318 | ​ |  | 2,743
Contract diagnostics and other | ​ |  | 43 | ​ |  | 28
Service revenue, net | ​ | $ | 6,164 | ​ | $ | 4,599

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months Ended September 30,
(dollars in thousands) | ​ | Diagnostic Testing
​ |  | 2025 |  | 2024
Medicaid | ​ | $ | 24 | ​ | $ | 33
Medicare | ​ |  | 6,977 | ​ |  | 4,435
Self-pay | ​ |  | 14 | ​ |  | 33
Third party payers | ​ |  | 8,327 | ​ |  | 6,796
Contract diagnostics and other | ​ |  | 84 | ​ |  | 32
Service revenue, net | ​ | $ | 15,426 | ​ | $ | 11,329

​

Revenue from the Medicare and Medicaid programs account for a portion of the Company’s patient diagnostic service revenue. Laws and regulations governing those programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change by a material amount in the near term.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using the expected value method based on historical experience. The Company does not typically

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enter arrangements where multiple contracts can be combined as the terms regarding services are generally found within a single agreement/requisition form. The Company derives its revenues from the following types of transactions: diagnostic testing (“Diagnostic”), revenues from the Company’s ICP technology and bio-pharma projects encompassing genetic diagnostics (collectively “Biomarker”), revenues from clinical research grants from state and federal research programs and diagnostic product sales, including revenues from equipment leases and reagent sales associated with our HSRR program.

Deferred revenue

Deferred revenue, or unearned revenue, refers to advance payments for products or services that are to be delivered in the future. The Company records such prepayment of unearned revenue as a liability, as revenue that has not yet been earned, but represents products or services that are owed to a customer. As the product or service is delivered over time, the Company recognizes the appropriate amount of revenue from deferred revenue. For the periods ended September 30, 2025 and December 31, 2024, the deferred revenue was $0.3 million and $0.2 million, respectively.

Contractual Allowances and Adjustments

We are reimbursed by payers for services we provide. Payments for services covered by payers average less than billed charges. We monitor revenue and receivables from payers and record an estimated contractual allowance for certain revenue and receivable balances as of the revenue recognition date to properly account for anticipated differences between amounts estimated in our billing system and amounts ultimately reimbursed by payers. Accordingly, the total revenue and receivables reported in our condensed consolidated financial statements are recorded at the amounts expected to be received from these payers. For service revenue, the contractual allowance is estimated based on several criteria, including unbilled claims, historical trends based on actual claims paid, current contract and reimbursement terms and changes in customer base and payer/product mix. The billing functions for the remaining portion of our revenue are contracted and fixed fees for specific services and are recorded without an allowance for contractual discounts. The following table presents our revenues initially recognized for each associated payer class during the three and nine months ended September 30, 2025 and 2024.

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended September 30,
(dollars in thousands) | ​ | ​ | ​ | Contractual Allowances and | ​ | Revenues, net of Contractual
​ | ​ | Gross Revenues | ​ | adjustments | ​ | Allowances and adjustments
​ |  | 2025 |  | 2024 |  | 2025 |  | 2024 |  | 2025 |  | 2024
Medicaid | ​ | $ | 11 | ​ | $ | 8 | ​ | $ | — | ​ | $ | — | ​ | $ | 11 | ​ | $ | 8
Medicare | ​ |  | 2,788 | ​ |  | 1,819 | ​ |  | — | ​ |  | — | ​ |  | 2,788 | ​ |  | 1,819
Self-pay | ​ |  | 4 | ​ |  | 1 | ​ |  | — | ​ |  | — | ​ |  | 4 | ​ |  | 1
Third party payers | ​ |  | 11,612 | ​ |  | 9,356 | ​ |  | (8,294) | ​ |  | (6,613) | ​ |  | 3,318 | ​ |  | 2,743
Contract diagnostics and other | ​ |  | 43 | ​ |  | 28 | ​ |  | — | ​ |  | — | ​ |  | 43 | ​ |  | 28
​ | ​ |  | 14,458 | ​ |  | 11,212 | ​ |  | (8,294) | ​ |  | (6,613) | ​ |  | 6,164 | ​ |  | 4,599
Product | ​ |  | 721 | ​ |  | 681 | ​ |  | — | ​ |  | — | ​ |  | 721 | ​ |  | 681
​ | ​ | $ | 15,179 | ​ | $ | 11,893 | ​ | $ | (8,294) | ​ | $ | (6,613) | ​ | $ | 6,885 | ​ | $ | 5,280

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months Ended September 30,
(dollars in thousands) | ​ | ​ | ​ | Contractual Allowances and | ​ | Revenues, net of Contractual
​ | ​ | Gross Revenues | ​ | adjustments | ​ | Allowances and adjustments
​ |  | 2025 |  | 2024 |  | 2025 |  | 2024 |  | 2025 |  | 2024
Medicaid | ​ | $ | 24 | ​ | $ | 33 | ​ | $ | — | ​ | $ | — | ​ | $ | 24 | ​ | $ | 33
Medicare | ​ |  | 6,977 | ​ |  | 4,435 | ​ |  | — | ​ |  | — | ​ |  | 6,977 | ​ |  | 4,435
Self-pay | ​ |  | 14 | ​ |  | 33 | ​ |  | — | ​ |  | — | ​ |  | 14 | ​ |  | 33
Third party payers | ​ |  | 29,141 | ​ |  | 23,285 | ​ |  | (20,814) | ​ |  | (16,489) | ​ |  | 8,327 | ​ |  | 6,796
Contract diagnostics and other | ​ |  | 84 | ​ |  | 32 | ​ |  | — | ​ |  | — | ​ |  | 84 | ​ |  | 32
​ | ​ |  | 36,240 | ​ |  | 27,818 | ​ |  | (20,814) | ​ |  | (16,489) | ​ |  | 15,426 | ​ |  | 11,329
Product | ​ |  | 1,999 | ​ |  | 1,936 | ​ |  | — | ​ |  | — | ​ |  | 1,999 | ​ |  | 1,936
​ | ​ | $ | 38,239 | ​ | $ | 29,754 | ​ | $ | (20,814) | ​ | $ | (16,489) | ​ | $ | 17,425 | ​ | $ | 13,265

​

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Allowance for Credit Losses

The Company provides for a general allowance for collectability of services when recording net sales. The Company has adopted the policy of recognizing net sales to the extent it expects to collect that amount. Reference is made to FASB 954-605-45-5 and ASU 2011-07, Health Care Entities: Presentation and Disclosure of Patient Service Revenue, Provision for Credit Loss, and the Allowance for Credit Losses. The change in the allowance for credit losses is directly related to the increase in patient service revenues. The following table presents our reported revenues net of the collection allowance and adjustments for the three and nine months ended September 30, 2025 and 2024.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended September 30,
​ | ​ | Revenues, net of | ​ | ​ | ​ |
(dollars in thousands) | ​ | Contractual Allowances | ​ | Allowances for credit | ​ |
​ | ​ | and adjustments | ​ | losses | ​ | Total
​ |  | 2025 |  | 2024 |  | 2025 |  | 2024 |  | 2025 |  | 2024
Medicaid | ​ | $ | 11 | ​ | $ | 8 | ​ | $ | (1) | ​ | $ | (3) | ​ | $ | 10 | ​ | $ | 5
Medicare | ​ |  | 2,788 | ​ |  | 1,819 | ​ |  | (51) | ​ |  | (27) | ​ |  | 2,737 | ​ |  | 1,792
Self-pay | ​ |  | 4 | ​ |  | 1 | ​ |  | — | ​ |  | — | ​ |  | 4 | ​ |  | 1
Third party payers | ​ |  | 3,318 | ​ |  | 2,743 | ​ |  | (66) | ​ |  | (41) | ​ |  | 3,252 | ​ |  | 2,702
Contract diagnostics and other | ​ |  | 43 | ​ |  | 28 | ​ |  | — | ​ |  | — | ​ |  | 43 | ​ |  | 28
​ | ​ |  | 6,164 | ​ |  | 4,599 | ​ |  | (118) | ​ |  | (71) | ​ |  | 6,046 | ​ |  | 4,528
Product | ​ |  | 721 | ​ |  | 681 | ​ |  | — | ​ |  | — | ​ |  | 721 | ​ |  | 681
​ | ​ | $ | 6,885 | ​ | $ | 5,280 | ​ | $ | (118) | ​ | $ | (71) | ​ | $ | 6,767 | ​ | $ | 5,209

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months Ended September 30,
​ | ​ | Revenues, net of | ​ | ​ | ​ |
(dollars in thousands) | ​ | Contractual Allowances | ​ | Allowances for credit | ​ |
​ | ​ | and adjustments | ​ | losses | ​ | Total
​ |  | 2025 |  | 2024 |  | 2025 |  | 2024 |  | 2025 |  | 2024
Medicaid | ​ | $ | 24 | ​ | $ | 33 | ​ | $ | 32 | ​ | $ | (12) | ​ | $ | 56 | ​ | $ | 21
Medicare | ​ |  | 6,977 | ​ |  | 4,435 | ​ |  | (42) | ​ |  | (66) | ​ |  | 6,935 | ​ |  | 4,369
Self-pay | ​ |  | 14 | ​ |  | 33 | ​ |  | — | ​ |  | (3) | ​ |  | 14 | ​ |  | 30
Third party payers | ​ |  | 8,327 | ​ |  | 6,796 | ​ |  | (65) | ​ |  | (102) | ​ |  | 8,262 | ​ |  | 6,694
Contract diagnostics and other | ​ |  | 84 | ​ |  | 32 | ​ |  | — | ​ |  | — | ​ |  | 84 | ​ |  | 32
​ | ​ |  | 15,426 | ​ |  | 11,329 | ​ |  | (75) | ​ |  | (183) | ​ |  | 15,351 | ​ |  | 11,146
Product | ​ |  | 1,999 | ​ |  | 1,936 | ​ |  | — | ​ |  | — | ​ |  | 1,999 | ​ |  | 1,936
​ | ​ | $ | 17,425 | ​ | $ | 13,265 | ​ | $ | (75) | ​ | $ | (183) | ​ | $ | 17,350 | ​ | $ | 13,082

​

Costs to Obtain or Fulfill a Customer Contract

Sales commissions are expensed when incurred because the amortization period would have been one year or less. These costs are recorded in operating expenses in the condensed consolidated statements of operations.

Shipping and handling costs are comprised of inbound and outbound freight and associated labor. The Company accounts for shipping and handling activities related to contracts with customers as fulfillment costs which are included in cost of sales in the condensed consolidated statements of operations.

Accounts Receivable

The Company has provided an allowance for potential credit losses, which has been determined based on management’s industry experience. The Company grants credit without collateral to its patients, most of who are insured under third party payer agreements.

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The following summarizes the mix of receivables outstanding related to payer categories:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
(dollars in thousands) |  | September 30, 2025 |  | December 31, 2024
Medicaid | ​ | $ | 24 | ​ | $ | (12)
Medicare | ​ |  | 1,727 | ​ |  | 1,086
Self-pay | ​ |  | 11 | ​ |  | 13
Third party payers | ​ |  | 808 | ​ |  | 530
Contract diagnostic services, product and other | ​ |  | 437 | ​ |  | 177
​ | ​ | $ | 3,007 | ​ | $ | 1,794
Less allowance for credit losses | ​ |  | (1,050) | ​ |  | (995)
Accounts receivable, net | ​ | $ | 1,957 | ​ | $ | 799

​

The following table presents the roll-forward of the allowance for credit losses for the nine months ended September 30, 2025 and 2024.

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Nine Months Ended September 30,
(dollars in thousands) | ​ | ​ | 2025 | ​ | 2024
Balance, January 1 |  | $ | (995) | ​ | $ | (2,572)
Provision for credit losses: |  | ​ |  | ​ | ​ |
Medicaid | ​ | ​ | 32 | ​ | ​ | (12)
Medicare | ​ |  | (42) | ​ |  | (66)
Self-pay | ​ | ​ | — | ​ | ​ | (3)
Third party payers | ​ |  | (65) | ​ |  | (102)
​ | ​ |  | (75) | ​ |  | (183)
Credit loss income (expense) | ​ | ​ | 20 | ​ | ​ | —
Total charges | ​ |  | (55) | ​ |  | (183)
Balance, September 30 | ​ | $ | (1,050) | ​ | $ | (2,755)

​

Customer Revenue and Accounts Receivable Concentration

Our customers are oncologists, hospitals, reference laboratories, physician-office laboratories, and pharma and biotech companies. Customers that accounted for 10% or greater of our net sales or accounts receivable for the identified periods is as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Net sales | ​ | ​ | Net sales | ​ | ​ | Accounts receivable, as of | ​
​ | ​ | Three Months Ended | ​ | ​ | Nine Months Ended | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | ​ | September 30, | ​ | ​ | September 30, | ​ | December 31, | ​
​ | ​ | 2025 | ​ | 2024 | ​ | ​ | 2025 | ​ | 2024 | ​ | ​ | 2025 | ​ | 2024 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Customer A | ​ | 27 | % | 24 | % | ​ | 16 | % | 14 | % | ​ | 26 | % | 29 | %
Customer B | ​ | 11 | % | * | ​ | ​ | * | ​ | * | ​ | ​ | * | ​ | * | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
* represents less than 10% | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

​

​

11. SEGMENT REPORTING

The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer. The Company has no segment managers who are held accountable by the CODM for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, the Company has determined it has a single operating segment.

The CODM uses consolidated net loss for purposes of allocating resources and assessing segment performance, including monitoring actual results versus historical periods. Cost of revenue and operating expenses are considered

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significant segment expenses that are regularly provided to the CODM and included within consolidated net loss. The measure of segment assets is the total assets on the Company’s condensed consolidated balance sheets. Capital expenditures are reported on a consolidated basis on the Company’s condensed consolidated statements of cash flows. The following table includes the Company's segment revenue, significant segment expenses, and other segment items to reconcile to net loss.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Dollars in Thousands | ​ | Dollars in Thousands
​ | Three Months Ended | ​ | Nine Months Ended
​ | September 30, | ​ | September 30,
​ | 2025 |  | 2024 |  | 2025 |  | 2024
Net sales | $ | 6,767 | ​ | $ | 5,209 | ​ | $ | 17,350 | ​ | $ | 13,082
Less expense (income): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cost of sales |  | 3,762 | ​ |  | 2,932 | ​ |  | 9,776 | ​ |  | 8,169
Operating expenses (1) | ​ | 3,066 | ​ | ​ | 2,874 | ​ | ​ | 9,318 | ​ | ​ | 8,793
Other segment expense (income) (2) |  | 18 | ​ |  | 29 | ​ |  | (855) | ​ |  | 45
Net income (loss) | $ | (79) | ​ | $ | (626) | ​ | $ | (889) | ​ | $ | (3,925)

​

(1) Operating expenses include sales and marketing expenses, general and administrative expenses, research and development expenses and stock-based compensation.

(2) Other segment items include interest income, interest expense, gain on write-off of liability and other income, including Employee Retention Credits received.

12. EMPLOYEE RETENTION CREDIT

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Under the provisions of the CARES Act, and the subsequent extensions, the Company became eligible to apply for a refundable Employee Retention Credit (the “ERC”) subject to certain criteria, which could be used to offset payroll tax liabilities.

​

In November 2022, the Company submitted an ERC claim totaling approximately $1.5 million. During the three months ended June 30, 2025, the Company received payments for part of the ERC claim totaling approximately $0.8 million. The Company recorded this as other income in the condensed consolidated statements of operations.

​

The Company retains all rights to pursue and receive the remaining balance of approximately $0.7 million and is actively evaluating the likelihood and timing of any additional disbursements. The Company has not waived any claims to the unpaid portion of the ERC and is taking reasonable steps to secure the remaining balance. However, there can be no assurance as to the timing, amount, or certainty of receipt of additional funds, and the Company will continue to assess the collectability of the remaining claim in accordance with applicable accounting standards.

13. SUBSEQUENT EVENTS

The Company has evaluated events and transactions subsequent to September 30, 2025 through the date of this Quarterly Report on Form 10-Q, and there are no other events to report other than what has been disclosed in the condensed consolidated financial statements.

​

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

Forward-Looking Information

This Quarterly Report on Form 10-Q or the information incorporated herein by reference, including this Management’s Discussion and Analysis, contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. These statements are based on management’s current views, assumptions or beliefs of future events and financial performance and are subject to uncertainty and changes in circumstances. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements. These factors include, among other things: our expected revenue, income (loss), receivables, operating expenses, supplier pricing, availability and prices of raw materials, insurance reimbursements, product pricing, foreign currency exchange rates, sources of funding operations and acquisitions, our ability to raise funds, sufficiency of available liquidity, future interest and inflation costs, future economic circumstances, business strategy, industry conditions and key trends, our ability to execute our operating plans, the success of our cost savings initiatives, competitive environment and related market conditions, our ability to comply with the listing requirements of the Nasdaq Capital Market, expected financial and other benefits from our organizational restructuring activities, geopolitical uncertainties including increased U.S. trade tariffs, reciprocal and retaliatory tariffs from other countries, and trade disputes with other countries, the ongoing Russia and Ukraine conflict and the Israel-Hamas war, actions of governments including the prolonged U.S. government shutdown and regulatory factors affecting our business, projections of future earnings, revenues, synergies, accretion or other financial items, any statements of the plans, strategies and objectives of management for future operations, retaining key employees and other risks as described in our reports filed with the SEC. In some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” or the negative of such terms and other similar expressions.

You are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements. Actual results may differ materially from those suggested by the forward-looking statements that we make for a number of reasons, including those described in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q and our prior filings with the Securities and Exchange Commission.

We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The following discussion should be read together with our condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q and with the audited financial statements, related notes and Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which we filed with the Securities and Exchange Commission on March 27, 2025. Results for the three and nine months ended September 30, 2025 are not necessarily indicative of results that may be attained in the future.

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. 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. 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,

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respectively, which house teams that collaborate on the development of new products and services. 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. 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. 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. 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. 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. 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. 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. 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.

​

Recent Developments

Change Healthcare

Change Healthcare (“CHC”), a subsidiary of UnitedHealth Group, experienced 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. Thus, when CHC shut down its business operations our pathology billings were halted. Our ability to process billings, accept payer remittances, process medical and billing benefit notices, bill secondary insurers, as well as patients, and communicate with commercial payers was severely impacted. Starting shortly after the breach, we redirected a significant amount of our internal resources to internally handle the billing services that CHC was no longer delivering. This resulted in billing and cash reimbursement delays during the year ended December 31, 2024.

Along with the delays in billing and cash reimbursements, we incurred approximately $0.3 million of expenses during the year ended December 31, 2024, as we incurred lost collections and used alternative methods for claims processing. CHC established a Temporary Funding Assistance Program to help bridge the gap in short-term cash flow needs for its customers affected by the disruption of its services due to the cyberattack. On October 28, 2024, we received a notice from CHC stating that they had restored the connectivity of their systems. During the year ended December 31, 2024, we received approximately $1.1 million from CHC through this program.

During the nine months ended September 30, 2025, we have made approximately $0.6 million in repayments to CHC and in May 2025, we wrote off another $0.1 million. See Note 4 – “Accrued Expenses” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion.

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Employee Retention Credit (ERC)

On March 27, 2020, the U.S. government enacted the CARES Act. Under the provisions of the CARES Act, and its subsequent extensions, we became eligible to apply for a refundable Employee Retention Credit (the “ERC”), subject to certain criteria, which could be used to offset payroll tax liabilities.

​

In November 2022, we submitted an ERC claim totaling approximately $1.5 million. During the three months ended June 30, 2025, we received payments totaling approximately $0.8 million. We recorded this amount as other income in the condensed consolidated statements of operations.

We retain all rights to pursue and receive the remaining balance of approximately $0.7 million and is actively evaluating the likelihood and timing of any additional disbursements. We have not waived any claims to the unpaid portion of the ERC and is taking reasonable steps to secure the remaining balance. However, there can be no assurance as to the timing, amount, or certainty of receipt of additional funds, and we will continue to assess the collectability of the remaining claim in accordance with applicable accounting standards.

The $0.8 million ERC refund and the $0.1 million CHC write-off discussed above are non-recurring items and, as a result of these non-recurring items, we recorded approximately $0.9 million of other income in the condensed consolidated statements of operations.

Going Concern

The condensed 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 and do not include any adjustments that might result should we be unable to continue as a going concern. We have incurred substantial operating losses and have typically used cash in our operating activities for the past several years. For the nine months ended September 30, 2025, we had an operating loss of $1.7 million and net cash provided by operating activities of $0.3 million. As of September 30, 2025, we had an accumulated deficit of $103.3 million and working capital of $1.2 million. Our ability to continue as a going concern over the next twelve months from the date the condensed 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.

To meet our current and future obligations we have taken the following steps to capitalize our business:

| ● | During the three months ended September 30, 2025, we received proceeds of approximately $1.3 million from the exercise of 100,000 warrants. As of September 30, 2025, the Company still has 31,944 warrants outstanding. However, there is no guarantee that we will receive future proceeds from the outstanding warrants as they may never be exercised or they may be exercised in a cashless manner.

Notwithstanding the aforementioned circumstances, there remains substantial doubt about our ability to continue as a going concern over the next twelve months from the date of issuance of this Quarterly Report on Form 10-Q. 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.

One Big Beautiful Bill Act of 2025

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant changes to federal tax law and other regulatory provisions that may impact us. We are currently assessing the impact of the OBBBA on its business, outlook, and financial statements.

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Results of Operations for the Three Months Ended September 30, 2025 and 2024

Net Sales. Net sales were as follows:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Dollars in Thousands |
​ | ​ | Three Months Ended | ​ | ​ | ​
​ | ​ | September 30, | ​ | Change |
​ |  | 2025 |  | 2024 |  | $ |  | % |
Service revenue, net, less allowance for credit loss | ​ | $ | 6,046 | ​ | $ | 4,528 | ​ | $ | 1,518 | ​ | 34 | %
Product revenue | ​ |  | 721 | ​ |  | 681 | ​ | ​ | 40 | ​ | 6 | %
Net Sales | ​ | $ | 6,767 | ​ | $ | 5,209 | ​ | $ | 1,558 | ​ | 30 | %

​

Net sales for the three months ended September 30, 2025 were approximately $6.8 million, an increase of $1.5 million as compared to the same period in 2024. During the three months ended September 30, 2025, patient diagnostic service revenue increased $1.5 million as compared to the same period in 2024. This increase was due to a greater number of cases processed in the current year period. We processed 4,258 cases during the three months ended September 30, 2025 as compared to 3,584 cases during the same period in 2024, or a 19% increase in cases. We routinely record revenue adjustments due to over-collections of recognized revenue and changes in expected reimbursement rates. During the three months ended September 30, 2025 and 2024, such adjustment was $0.2 million and zero, respectively. Product revenue for the three months ended September 30, 2025 increased less than $0.1 million as compared to the prior year second quarter.

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. Cost of sales increased by $0.8 million for the three months ended September 30, 2025 as compared to the same period in 2024. The increase is primarily attributable to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the higher number of cases processed, as discussed above.

Gross Profit and Gross Margins. Gross profit and gross margins were as follows:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Dollars in Thousands |
​ | ​ | Three Months Ended | ​ | ​ | ​
​ | ​ | September 30, | ​ | Change |
​ |  | 2025 |  | 2024 |  | $ |  | % |
Gross Profit | ​ | $ | 3,005 | ​ | $ | 2,277 | ​ | 728 | ​ | 41 | ​
Gross Margin | ​ | ​ | 44% | ​ | ​ | 44% | ​ | ​ | ​ | ​ | ​

​

Gross margin was 44% and 44% of total net sales for the three months ended September 30, 2025 and 2024, respectively. Gross profit was approximately $3.0 million and $2.3 million during the three months ended September 30, 2025 and 2024, respectively. The gross profit increased $0.7 million during the three months ended September 30, 2025, as compared to the prior year period, as a result of increases in case volume and revenue. We operate a fully staffed CLIA and College of American Pathologists (“CAP”) certified clinical pathology and molecular laboratory. As such, it is necessary to maintain appropriate staffing levels to provide industry standard laboratory processing and reporting to ordering physicians.

​

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 increased by $0.2 million for the three months ended September 30, 2025 as compared to the same period in 2024. For the three months ended September 30, 2025: (1) general and administrative expenses increased by $0.1 million primarily due to increased personnel costs, (2) sales and marketing expenses increased by $0.1 million due increases in personnel and recruiting costs for our sales force, (3) research and development expenses increased by $0.2 million due to an increase in personnel costs of $0.1 million and $0.1 million in non-recurring costs related to an office move, and (4) stock-based compensation decreased by $0.2 million

​

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Other (Expense) Income. We recorded net other expense of $18 thousand for the three months ended September 30, 2025 which included $9 thousand related to net interest expense. During the three months ended September 30, 2024, we recorded net other expense of $29 thousand which was all related to net interest expense.

Results of Operations for the Nine Months Ended September 30, 2025 and 2024

Net Sales. Net sales were as follows:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Dollars in Thousands | ​
​ | ​ | Nine Months Ended | ​ | ​ | ​
​ | ​ | September 30, | ​ | Change | ​
​ |  | 2025 |  | 2024 |  | $ |  | % |
Service revenue, net, less allowance for credit loss | ​ | $ | 15,351 | ​ | $ | 11,146 | ​ | $ | 4,205 | ​ | 38 | %
Product revenue | ​ |  | 1,999 | ​ |  | 1,936 | ​ | ​ | 63 | ​ | 3 | %
Net Sales | ​ | $ | 17,350 | ​ | $ | 13,082 | ​ | $ | 4,268 | ​ | 33 | %

​

Net sales for the nine months ended September 30, 2025 were approximately $17.4 million, an increase of $4.3 million as compared to the same period in 2024. During the nine months ended September 30, 2025, patient diagnostic service revenue increased by $4.2 million as compared to the same period in 2024. This increase was due to a greater number of cases processed in the current year period. We processed 10,971 cases during the nine months ended September 30, 2025 as compared to 8,745 cases during the same period in 2024, or a 25% increase in cases. Product revenue for the nine months ended September 30, 2025 increased by $0.1 million as compared to the same period in 2024.

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. Cost of sales increased by $1.6 million for the nine months ended September 30, 2025 as compared to the same period in 2024. The increase is primarily attributable to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the higher number of cases processed, as discussed above.

Gross Profit and Gross Margins. Gross profit and gross margins were as follows:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Dollars in Thousands | ​
​ | ​ | Nine Months Ended | ​ |  | ​
​ | ​ | September 30, | ​ | Change | ​
​ |  | 2025 |  | 2024 |  | $ |  | % | ​
Gross Profit | ​ | $ | 7,574 | ​ | ​ | 4,913 | ​ | 1,933 | ​ | 73 | ​
Gross Margin | ​ | ​ | 44% | ​ | ​ | 38% |  | ​ | ​ | ​ | ​

​

Gross margin was 44% and 38% of total net sales for the nine months ended September 30, 2025 and 2024, respectively. Gross profit was approximately $7.6 million and $4.9 million during the nine months ended September 30, 2025 and 2024, respectively. The gross profit increased during the nine months ended September 30, 2025, 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. As such, it is necessary to maintain appropriate staffing levels to provide industry standard laboratory processing and reporting to ordering physicians. The increase in case volume enabled our laboratory to yield economies of scale and to leverage fixed expenses.

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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 increased $0.5 million for the nine months ended September 30, 2025 as compared to the same period in 2024. For the nine months ended September 30, 2025: (1) general and administrative expenses increased by $0.3 million primarily due to increases in personnel costs, (2) sales and marketing expenses decreased by $0.1 million due decreases in marketing costs, (3) research

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and development expenses increased by $0.3 million due to an increase in personnel costs and operating supplies, and (4) stock-based compensation increased by less than $0.1 million

Other (Expense) Income. We recorded net other income of $0.9 million for the nine months ended September 30, 2025 which included income of $0.1 million from the gain on settlement of liabilities, income of $0.8 million from the receipt of Employee Retention Credits, and net interest expense of $57 thousand. During the nine months ended September 30, 2024, we recorded net other expense of $45 thousand which was related to net interest expense.

Liquidity and Capital Resources

Our working capital positions were as follows (in thousands):

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2025 |  | December 31, 2024 |  | Change
Current assets (including cash of $2,305 and $1,389 respectively) | ​ | $ | 5,668 | ​ | $ | 3,451 | ​ | $ | 2,217
Current liabilities | ​ |  | 4,453 | ​ |  | 4,271 | ​ |  | 182
Working capital | ​ | $ | 1,215 | ​ | $ | (820) | ​ | $ | 2,035

​

In July 2025, we received net cash proceeds of approximately $1.3 million from the exercise of 100,000 warrants, which resulted in the issuance of 100,000 shares of common stock of the Company.

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Analysis of Cash Flows – Nine Months Ended September 30, 2025 and 2024

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Dollars in Thousands
​ | ​ | Nine Months Ended September 30,
​ |  | 2025 |  | 2024 |  | Change
Net cash provided by (used in) operating activities | ​ | $ | 319 | ​ | $ | (126) | ​ | $ | 445
Net cash used in investing activities | ​ | ​ | (251) | ​ | ​ | (179) | ​ | ​ | (72)
Net cash provided by (used in) financing activities | ​ |  | 848 | ​ |  | (144) | ​ |  | 992
Net change in cash | ​ | $ | 916 | ​ | $ | (449) | ​ | $ | 1,365

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Cash Flows Provided by or Used in Operating Activities. The cash flows provided by operating activities of $0.3 million during the nine months ended September 30, 2025 included an increase in accounts payable of $0.5 million, an increase in deferred revenues of $0.1 million, and non-cash adjustments of $2.4 million. These were partially offset by a net loss of $0.9 million, a decrease in other assets of $0.1 million, an increase in accounts receivables of $1.2 million, an increase in inventories of $0.1 million, a decrease in operating lease liabilities of $0.2 million and a decrease in accrued expenses of $0.2 million. The non-cash adjustments included less than $0.1 million for the change in provision for credit losses. We routinely provide a reserve for credit losses as a result of having limited in-network payer contracts. The other non-cash adjustments to net loss of approximately $2.4 million include, among other things, depreciation and amortization, and stock-based compensation. The cash flows used in operating activities of approximately $0.1 million during the nine months ended September 30, 2024 included a net loss of $3.9 million, an increase in inventories of $0.2 million and a decrease in operating lease liabilities of $0.2 million. These were partially offset by a decrease in accounts receivables of $0.1 million, a decrease in other assets of $0.2 million, an increase in accounts payable of $0.1 million, an increase in deferred revenues of $0.2 million, an increase in accrued expenses of $0.9 million and non-cash adjustments of $2.7 million.

Cash Flows Used In Investing Activities. Cash flows used in investing activities were approximately $0.3 million and $0.2 million for the nine months ended September 30, 2025 and 2024, respectively, resulting from purchases of property and equipment.

Cash Flows Used in or Provided by Financing Activities. Cash flows provided by financing activities totaled $0.8 million for the nine months ended September 30, 2025, which included $1.3 million in proceeds from the exercise of warrants partially offset by $0.5 million in payments on our long-term debt and finance lease obligations. Cash flows used

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in financing activities totaled $0.1 million for the nine months ended September 30, 2024, which included $0.5 million in payments on our long-term debt and finance lease obligations. These were partially offset by $0.3 million of proceeds from debt and $0.1 million of proceeds from the issuance of common stock.

For further information regarding our future funding requirements, see the Going Concern disclosure in Note 1 of the notes to the unaudited condensed consolidated financial statements included with this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

At each of September 30, 2025 and December 31, 2024, other than certain purchase commitments of approximately $1.9 million and $3.1 million, respectively, 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 purchase commitments are mostly for laboratory reagents used in our normal operating business.

Contractual Obligations and Commitments

No significant changes to contractual obligations and commitments occurred during the three months ended September 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission on March 27, 2025.

Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires our 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. Actual financial results based on judgments or estimates may vary under different assumptions or circumstances. Our critical accounting estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission on March 27, 2025.

Recently Issued Accounting Pronouncements

See the accompanying unaudited condensed consolidated financial statements and Note 2 - “Summary of Significant Accounting Policies” in the notes to unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, for additional information regarding recently issued accounting pronouncements.

Impact of Inflation

Inflationary factors, such as increases in our cost of goods, labor, or other operating expenses, may adversely affect our operating results. 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 three and nine months ended September 30, 2025 and 2024. We cannot assure you, however, that we will be able to increase the prices of our products or reduce our operating expenses in an amount sufficient to offset the effects future inflationary pressures may have on our gross margin. Accordingly, we cannot assure you that our financial condition and results of operations will not be materially impacted by inflation in the future.

Item 3. 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.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, management performed, with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and no evaluation of controls and procedures can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2025.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The healthcare industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirement, reimbursement for patient services and Medicare and Medicaid fraud and abuse. Government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers.

Violations of these laws and regulations could result in expulsion from government healthcare programs together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Management believes that we are in compliance with fraud and abuse regulations, as well as other applicable government laws and regulations. While no material regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time.

The 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 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.

From time to time, we are involved in legal proceedings related to matters, which are incidental to our business. 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.

As previously disclosed, the Company was involved in a legal proceeding brought by a former employee before the court in San Antonio, Texas, alleging unfair dismissal and seeking monetary damages. The matter has since been resolved through a settlement agreement. The settlement was reached without any admission of liability and is not material to the Company’s financial statements. Accordingly, the matter is considered closed.

For a fulsome discussion of legal proceedings, see Note 8 - “Commitment and Contingencies” in the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 27, 2025. This discussion is incorporated herein by reference.

Item 1A. Risk Factors

As disclosed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, there are a number of risks and uncertainties that may have a material effect on the operating results of our business and our financial condition. The following information updates, and should be read in conjunction with, the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, and other filings we make with the Securities and Exchange Commission, which could materially affect our business, financial condition or future results. The risks described in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.

There have been no material changes from the risk factors disclosed in “Part I, Item 1A—Risk Factors” of our most recent Annual Report, other than as described below.

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Significant political, trade, regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations.

We operate mainly in the United States but may sell our products in other countries throughout the world. Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S. federal administration, are difficult to predict and may have a material adverse effect on us. Similarly, changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For example, during the prior Trump administration, increased tariffs were implemented on goods imported into the U.S., particularly from China, Canada, and Mexico.

The current U.S. administration has threatened to continue to broadly impose tariffs, which could lead to corresponding punitive actions by the countries with which the U.S. trades. Historically, tariffs have led to increased trade and political tensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations. We are continuing to monitor global capital markets and assessing the potential impact of these factors on our business.

Additionally, severe or prolonged economic downturn or additional global financial crises could result in a variety of risks to our business, including weakened demand for any product candidates we develop or our ability to raise additional capital when needed on acceptable terms, if at all. For example, on October 1, 2025, the U.S. federal government entered a shutdown suspending services deemed non-essential as a result of the failure by Congress to enact regular appropriations for the 2026 fiscal year. If the shutdown continues for a prolonged period of time, it could result in increased uncertainty and volatility in the global economy and financial markets which could have a material adverse effect on our business. Weak economic conditions or significant uncertainty regarding the stability of financial markets related to stock market volatility, inflation, recession, changes in tariffs or other trade restrictions, trade agreements, trade wars or governmental fiscal, monetary and tax policies, among others, could adversely impact our business, financial condition and operating results.

Changes in tax law could adversely affect our business and financial condition.

The rules dealing with U.S. federal, state, and local and non-U.S. taxation are constantly under review by persons involved in the legislative process, the Internal Revenue Service, the U.S. Treasury Department and other taxing authorities. For example, the One Big Beautiful Bill Act (“OBBBA”) was signed into law on July 4, 2025 and made significant changes to U.S. federal tax law. Changes to tax laws or tax rulings, or changes in interpretations of existing laws (which changes may have retroactive application), could adversely affect us or holders of our common stock. For example, under Section 174 of the Internal Revenue Code of 1986, as amended, in taxable years beginning after December 31, 2021, expenses that are incurred for research and development performed outside the U.S. will be capitalized and amortized, which may have an adverse effect on our cash flow. The OBBBA provides that for taxable years beginning after December 31, 2024, expenses that are incurred for research and development performed in the U.S. may, at the taxpayer’s election, be immediately deducted or capitalized and amortized. In addition, the OBBBA provides that for taxable years beginning after December 31, 2021 and before January 1, 2025, certain eligible taxpayers generally may elect to retroactively deduct expenses for research and development performed in the U.S. in such taxable years by filing amended tax returns for such taxable years, and all other taxpayers that are not eligible to make such an election and that amortized expenses for research and development performed in the U.S. in such taxable years generally may elect to accelerate and deduct the remaining unamortized amounts of such research and development expenses (i) in the first taxable year beginning after December 31, 2024, or (ii) ratably over the two-taxable year period beginning with the first taxable year beginning after December 31, 2024. Further, changes to tax laws could subject us to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital tax, net worth, property, and goods and services taxes), which in turn could materially affect our financial position and results of operations. Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our products. In recent years, many such changes have been made, and changes are

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likely to continue to occur in the future. Furthermore, as we expand the scale of our business activities, any changes in the U.S. and non-U.S. taxation of such activities may increase our effective tax rate and harm our business, financial condition, and results of operations.

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

During the three months ended September 30, 2025, we did not have any sales of unregistered securities.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

| (a) | No ne

| (b) | None

| (c) | None of our directors or “officers,” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, adopted or terminated a Rule 10b5-1 trading plan or arrangement or a non-Rule 10b5-1 trading plan or arrangement, as defined in Item 408(c) of Regulation S-K, during the fiscal quarter covered by this Quarterly Report on Form 10-Q.

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Item 6. Exhibits

| (a) | Exhibits

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​ | ​ | ​
​ | ​ | ​
3.1 | ​ | Third Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Company’s 8-K filed on June 30, 2017).
​ | ​ | ​
3.2 | ​ | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K filed on June 30, 2017).
​ | ​ | ​
31.1 | ​ | Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.
​ | ​ | ​
31.2 | ​ | Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.
​ | ​ | ​
32.1* | ​ | Certification of Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.
​ | ​ | ​
32.2* | ​ | Certification of Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.
​ | ​ | ​
101.INS | ​ | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
​ | ​ | ​
101.SCH | ​ | Inline XBRL Taxonomy Extension Schema Document
​ | ​ | ​
101.CAL | ​ | Inline XBRL Taxonomy Extension Calculation Linkbase Document
​ | ​ | ​
101.DEF | ​ | Inline XBRL Taxonomy Extension Definition Linkbase Document
​ | ​ | ​
101.LAB | ​ | Inline XBRL Taxonomy Extension Label Linkbase Document
​ | ​ | ​
101.PRE | ​ | Inline XBRL Taxonomy Extension Presentation Linkbase Document
​ | ​ | ​
104 | ​ | Cover Page Interactive Data File – formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.
​ | ​ | ​

* This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​ | PRECIPIO, INC.
​ | ​ | ​
Date: November 14, 2025 | By: | /S/ ILAN DANIELI
​ | ​ | Ilan Danieli
​ | ​ | Chief Executive Officer (Principal Executive Officer)
​ | ​ | ​
​ | ​ | ​
Date: November 14, 2025 | By: | /S/ MATTHEW GAGE
​ | ​ | Matthew Gage
​ | ​ | Chief Financial Officer (Principal Financial and Accounting Officer)

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​

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