Predictive Oncology Inc
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
AGPU$6.73+11.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0001171843-24-002875
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001171843-24-004757
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 36 previous paragraphs and 45 current paragraphs.
19 unchanged; 13 reworded; 12 added; 4 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
ITEM 2. MANAGEMENT**’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current report
On July 25, 2024, our board of directors approved a plan to implement a strategic cost savings initiative, primarily related to the consolidation of the operations of our Birmingham laboratory into our Pittsburgh laboratory. We began implementing the cost savings initiative in August 2024 and continue to review its progress and effectiveness, including the impact of the changes on our operating segments as described immediately above. In particular, we anticipate that our three segments will be reduced to two in future reporting periods with the closure of our Birmingham laboratory. The initiative is expected to reduce the Company’s run rate for cash used in operating activities by approximately 20% annually when fully implemented in Q4 2024.
Current report
We recorded revenue of $698,368 and $730,005 in the six months ended June 30, 2024, and 2023, respectively. Revenue in the six months ended June 30, 2024, was primarily derived from the Eagan operating segment. The decrease in revenue from the comparative period was primarily due to a change in sales mix with decreased sales related to biologics in our Birmingham operating segment during the six months ended June 30, 2024.
Current report
Cost of sales was $340,383 and $279,900 in the six months ended June 30, 2024, and 2023, respectively. The gross profit margin was approximately 51% and 62% in the six months ended June 30, 2024, and 2023, respectively. The decline in gross profit margin for the six months ended June 30, 2024, was primarily due to increased labor costs.
Current report
G&A expense decreased by $276,246 to $4,764,265 in the six months ended June 30, 2024, compared to $5,040,511 in the comparable period in 2023. The decrease was primarily due to decreased employee compensation and decreased investor relations costs, offset by increased audit fees and consultant fees.
Current report
Operations expense increased by $124,024 to $1,995,584 in the six months ended June 30, 2024, compared to $1,871,560 in the comparable period in 2023. The increase was primarily due to higher employee compensation.
Current report
Sales and marketing expense increased by $224,815 to $1,024,155 in the six months ended June 30, 2024, compared to $799,340 in the comparable period in 2023. The increase was primarily due to severance related to a former executive.
Current report
Loss on impairment of property and equipment. We recorded no losses on impairment of property and equipment during the three and six months ended June 30, 2024. We recorded a loss on impairment of property and equipment of $162,905 during the three and six months ended June 30, 2023. We prepared an undiscounted cash flow for our Birmingham asset group as of June 30, 2023, to evaluate long-lived assets, then completed a fair value assessment which resulted in the impairment and allocated the impairment to the assets of the affected asset group. Please seeNote 5–* Property and Equipment* to our unaudited condensed consolidated financial statements for further information.
Current report
Other expense. We incurred other expense of $1,834 during the three months ended June 30, 2024, compared to no other expense in the comparable period in 2023. We incurred other expense of $3,571 during the six months ended June 30, 2024, compared to no other expense in the comparable period in 2023. Other expense in 2024 consisted primarily of interest expense.
Current report
Net cash used in operating activities was $6,634,072 and $7,002,033 for the six months ended June 30, 2024, and 2023, respectively. Cash used in operating activities decreased in the 2024 period primarily because of changes in working capital.
Current report
Net cash provided by financing activities was $3,246,692 and $0 for the six months ended June 30, 2024, and 2023, respectively. The cash provided in the six months ended June 30, 2024, was primarily due to proceeds from the issuance of common stock pursuant to the ATM offering completed in May 2024.
Current report
On May 3, 2024, the Company entered into an ATM Sales Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), to sell shares of the Company’s common stock, par value $0.01 per share (the “Shares”), having an aggregate sales price of up to $3,696,000, from time to time, through an “at the market offering” program pursuant to which Wainwright will act as sales agent. Subject to the terms and conditions of the Sales Agreement, Wainwright is permitted to sell the Shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Sales Agreement provides that Wainwright will be entitled to compensation for its services of 3.0% of the gross sales price of all shares sold through Wainwright under the Sales Agreement. As of June 30, 2024, the Company has sold 1,607,100 shares of common stock at an average price of approximately $2.30 per share, resulting in aggregate gross proceeds of approximately $3,696,000.
Removed paragraphs (4)
Previous report
Other expense. We incurred other expense of $1,737 in the three months ended March 31, 2024, compared to none in the three months ended March 31, 2023. Other expense is primarily interest expense.
Previous report
Net cash used in operating activities remained relatively consistent at $3,416,021 and $3,427,761 for the three months ended March 31, 2024, and 2023, respectively. The increase in the Company’s net loss was primarily offset by an increase in cash provided by changes in working capital, primarily due to increases in accounts payable and accrued expenses.
Previous report
Net cash used in financing activities was $112,372 for the three months ended March 31, 2024, and none for the comparable period in 2023. The cash used in the three months ended March 31, 2024, was primarily related to repayment of a note payable for insurance premiums financed over the insured period.
Previous report
**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reworded paragraphs (13)
Previous wording
Since inception, we have been unprofitable. We incurred net losses of $4,218,843 and $3,421,802 for the three months ended March 31, 2024, and 2023, respectively. As of March 31, 2024, and December 31, 2023, we had an accumulated deficit of $171,980,726 and $167,761,883, respectively.
Current wording
Since inception, we have been unprofitable. We incurred net losses of $7,400,104 and $7,345,170 for the six months ended June 30, 2024, and 2023, respectively. As of June 30, 2024, and December 31, 2023, we had an accumulated deficit of $175,161,987 and $167,761,883, respectively.
Previous wording
Comparison of three months ended March 31, 2024, and 2023
Current wording
Comparison of three and six months ended June 30, 2024, and 2023
Previous wording
Revenue. We recorded revenue of $419,646 and $239,895 in the three months ended March 31, 2024, and 2023, respectively. Revenue in the three months ended March 31, 2024, and 2023, was primarily derived from the Eagan operating segment. The increase in revenue from the comparative period was primarily due to a change in sales mix with increased sales of STREAMWAY systems in the three months ended March 31, 2024.
Current wording
Revenue. We recorded revenue of $278,722 and $490,110 in the three months ended June 30, 2024, and 2023, respectively. Revenue in the three months ended June 30, 2024, and 2023, was primarily derived from the Eagan operating segment. The decrease in revenue from the comparative period was primarily due to a change in sales mix with decreased sales of STREAMWAY systems in the three months ended June 30, 2024.
Previous wording
Cost of sales. Cost of sales was $187,415 and $120,139 in the three months ended March 31, 2024, and 2023, respectively. The gross profit margin was approximately 55% in the three months ended March 31, 2024, compared to 50% in the three months ended March 31, 2023. The improvement in gross profit margin was primarily due to a change in sales mix with increased sales of STREAMWAY systems in the three months ended March 31, 2024.
Current wording
Cost of sales. Cost of sales was $152,968 and $159,761 in the three months ended June 30, 2024, and 2023, respectively. The gross profit margin was approximately 45% and 67% in the three months ended June 30, 2024, and 2023, respectively. The decline in gross profit margin for the three months ended June 30, 2024, was primarily due to increased labor costs and a change in sales mix with decreased sales of STREAMWAY systems.
Previous wording
General and administrative expense. General and administrative (“G&A”) expenses primarily consist of management salaries, professional fees, consulting fees, administrative fees, and general office expenses. G&A expenses increased by $291,092 to $2,627,076 in the three months ended March 31, 2024, compared to $2,335,984 in the comparable period in 2023. The increase was primarily due to increased professional fees including audit and consultant fees as well as increased business taxes, offset by decreased employee compensation as well as decreased depreciation due to fully depreciated assets.
Current wording
General and administrative expense. General and administrative (“G&A”) expense primarily consists of management salaries, professional fees, consulting fees, administrative fees, and general office expenses. G&A expense decreased by $567,338 to $2,137,189 in the three months ended June 30, 2024, compared to $2,704,527 in the comparable period in 2023. The decrease was primarily due to decreased employee compensation and decreased investor relations costs, offset by increased consultant fees.
Previous wording
Operations expense. Operations expenses primarily consist of expenses related to product development and prototyping and testing. Operations expenses increased by $223,675 to $1,102,193 in the three months ended March 31, 2024, compared to $878,518 in the comparable period in 2023. The increase was primarily due to increased employee compensation associated with our research and development efforts.
Current wording
Operations expense. Operations expense primarily consists of expenses related to product development and prototyping and testing. Operations expense decreased by $99,651 to $893,391 in the three months ended June 30, 2024 compared to $993,042 in the comparable period in 2023. The decrease was primarily due to decreased cloud computing expenses related to our Pittsburgh operating segment.
Previous wording
Sales and marketing expense. Sales and marketing expenses consist of expenses required to market and sell our products including staff-related expenses for individuals performing this work. Sales and marketing expenses increased by $369,497 to $739,734 in the three months ended March 31, 2024, compared to $370,237 in the comparable period in 2023. The increase was primarily due to severance related to a former executive.
Current wording
Sales and marketing expense. Sales and marketing expenses consist of expenses required to market and sell our products including staff-related expenses for individuals performing this work. Sales and marketing expense decreased by $144,682 to $284,421 in the three months ended June 30, 2024, compared to $429,103 in the comparable period in 2023. The decrease was primarily due to lower employee compensation including sales commissions.
Previous wording
Other income. We earned other income of $18,657 in the three months ended March 31, 2024, compared to $42,228 in the comparable period in 2023. Other income is primarily interest income.
Current wording
Other income. We earned other income of $9,461 during the three months ended June 30, 2024, compared to $28,552 in the comparable period in 2023. We earned other income of $28,118 during the six months ended June 30, 2024, compared to $70,780 in the comparable period in 2023. Other income in all periods primarily consisted of interest income.
Previous wording
Gain on derivative instruments. We recorded a gain of $1,009 in the three months ended March 31, 2024, compared to $953 in the comparable period in 2023 related to the change in fair value of the derivative instruments.
Current wording
Gain on derivative instruments. We recorded a gain of $359 in the three months ended June 30, 2024, compared to $7,308 in the comparable period in 2023. We recorded a gain of $1,368 in the six months ended June 30, 2024, compared to $8,261 in the comparable period in 2023. These gains related to the change in fair value of the derivative.
Previous wording
Net cash used in investing activities was $3,032 and $46,643 for the three months ended March 31, 2024, and 2023, respectively. Cash used in investing activities decreased in the 2024 period primarily due to a decrease in the acquisition of property and equipment and intangible assets.
Current wording
Net cash used in investing activities was $9,510 and $305,745 for the six months ended June 30, 2024, and 2023, respectively. Cash used in investing activities decreased in the 2024 period primarily due to a decrease in fixed asset purchases during the six months ended June 30, 2024, as compared to the same period in 2023.
Previous wording
We have incurred significant and recurring losses from operations for the past several years and, as of March 31, 2024, had an accumulated deficit of $171,980,726. We had cash of $5,197,235 as of March 31, 2024, and need to raise significant additional capital to meet our operating needs. We had short-term obligations of $4,516,661 and long-term operating lease obligations of $2,027,348 as of March 31, 2024. We do not expect to generate sufficient operating revenue to sustain our operations in the near term. During the three months ended March 31, 2024, we incurred negative cash flows from operations of $3,416,021. Although we have attempted to improve our cash flows from operations by bolstering revenues and continue to seek ways to generate revenue through business development activities, there is no guarantee that we will be able to improve our cash flows from operations sufficiently or achieve profitability in the near term. As a result of these conditions, substantial doubt exists about our ability to continue as a going concern within one year after the date our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are issued.
Current wording
We have incurred significant and recurring losses from operations for the past several years and, as of June 30, 2024, had an accumulated deficit of $175,161,987. We had cash and cash equivalents of $5,331,770 as of June 30, 2024, and need to raise significant additional capital to meet our operating needs. We had short-term obligations of $4,618,511 and long-term operating lease obligations of $1,860,983 as of June 30, 2024. We do not expect to generate sufficient operating revenue to sustain our operations in the near term. During the six months ended June 30, 2024, we incurred negative cash flows from operations of $6,634,072. Although we have attempted to improve our cash flows from operations by bolstering revenues and continue to seek ways to generate revenue through business development activities, there is no guarantee that we will be able to improve our cash flows from operations sufficiently or achieve profitability in the near term. As a result of these conditions, substantial doubt exists about our ability to continue as a going concern within one year after the date our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are issued.
Previous wording
We are evaluating alternatives to obtain the required additional funding to maintain future operations. These alternatives may include, but are not limited to, equity financing, issuing debt, entering into other financing arrangements, or monetizing operating businesses or assets. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing stockholders or that result in our existing stockholders losing part or all of their investment. Despite these potential sources of funding, we may be unable to access financing or obtain additional liquidity when needed or under acceptable terms, if at all. If such financing or adequate funds from operations are not available, we would be forced to limit our business activities and we could default on existing payment obligations, which would have a material adverse effect on our financial condition and results of operations, and may ultimately be required to cease our operations and liquidate our business. Our condensed consolidated financial statements as of and for the three months ended March 31, 2024, included in this Quarterly Report on Form 10-Q, have been prepared assuming we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
Current wording
We are evaluating alternatives to obtain the required additional funding to maintain future operations. These alternatives may include, but are not limited to, equity financing, issuing debt, entering into other financing arrangements, or monetizing operating businesses or assets. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing stockholders or that result in our existing stockholders losing part or all of their investment. Despite these potential sources of funding, we may be unable to access financing or obtain additional liquidity when needed or under acceptable terms, if at all. If such financing or adequate funds from operations are not available, we would be forced to limit our business activities and we could default on existing payment obligations, which would have a material adverse effect on our financial condition and results of operations, and may ultimately be required to cease our operations and liquidate our business. Our condensed consolidated financial statements as of and for the three and six months ended June 30, 2024, included in this Quarterly Report on Form 10-Q, have been prepared assuming we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
Previous wording
We have primarily funded our operations through a combination of debt and equity instruments including short-term borrowings, and a variety of debt and equity offerings. We have no off-balance sheet transactions. There were no financing transactions during the three months ended March 31, 2024, or 2023.
Current wording
We have primarily funded our operations through a combination of debt and equity instruments including short-term borrowings, and a variety of debt and equity offerings. We have no off-balance sheet transactions.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
There were no financing transactions during the six months ended June 30, 2023.