Precipio (PRPO) risk factors, FY2024 10-K

Risks Related to Our Business and Strategy

1. 01There is substantial doubt about our ability to continue as a going concern
2. 02We may require significant additional financing to sustain our operations and without it we will not be able to continue operations
3. 03Our primary sources of funds to meet our liquidity and capital requirements include cash on hand, funds generated from operations and funding pursuant to a sales agreement with A.G.P./Alliance Global Partners (“AGP”)
4. 04of shares of our common stock. We have approximately $1.0 million of remaining availability pursuant to this prospectus supplement
5. 05We may need to raise substantial additional capital to commercialize our diagnostic technology, and our failure to obtain funding when needed may force us to delay, reduce or eliminate our product development programs or collaboration efforts or force us to restrict or cease operations
6. 06We have incurred losses since our inception and may incur losses in the foreseeable future. We cannot be certain that we will achieve or sustain profitability
7. 07We have had several customers who, from time to time, have individually represented 10% or more of our total revenue, or whose accounts receivable balances individually represented 10% or more of our total accounts receivable
8. 08We have been, and may continue to be, subject to costly litigation
9. 09Failure to Comply with Insider Trading Regulations and Policies Could Result in Significant Legal and Reputational Consequences
10. 10The commercial success of our diagnostic products, including those we are developing, will depend upon the degree of market acceptance of these products among physicians, patients, health care payers and the medical community and on our ability to successfully market our products
11. 11In addition, physicians may rely on guidelines issued by industry groups, such as the NCCN, medical societies, such as the College of American Pathologists (“CAP”), or other key oncology-related organizations before utilizing any diagnostic test
12. 12If we cannot compete successfully with our competitors, including new entrants in the market, we may be unable to increase or sustain our revenue or achieve and sustain profitability
13. 13We may not be able to develop new products or enhance the capabilities of our systems to keep pace with rapidly changing technology and customer requirements, which could have a material adverse effect on our business and operating results
14. 14International expansion of our business could expose us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States
15. 15Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results of operations
16. 16The regulatory framework for medical devices in the UK is likely to evolve now that the UK is no longer part of the EU. Changes to the UK regulations may require additional review of our devices and there is a risk our devices may not be compliant with any revised UK regulations
17. 17Unfavorable U.S. or global economic conditions could adversely affect our business, financial condition or results of operations
18. 18Global climate change could negatively affect our business
19. 19We may be impacted by economic and supply disruptions associated with events beyond our control, such as war, including the current conflicts between Russia and Ukraine and between Israel and Hamas, acts of terror, political unrest, public health concerns, labor disputes or natural disasters
20. 20Significant political, trade, regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations
21. 21The U.S. Congress, the Trump administration, or any new administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business
22. 22We depend upon a limited number of key personnel, and if we are not able to retain them or recruit additional qualified personnel, the execution of our strategy, management of our business and commercialization of our product candidates could be delayed or negatively impacted
23. 23We will need to increase the size of our organization, and we may experience difficulties in managing growth
24. 24We currently have limited experience in marketing products. If we are unable to establish marketing and sales capabilities and retain the proper talent to execute on our sales and marketing strategy, we may not be able to generate product revenue
25. 25Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer
26. 26Changes in tax law could adversely affect our business and financial condition
27. 27Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal tax purposes is subject to limitation and risk that could further limit our ability to utilize our net operating losses
28. 28The testing, manufacturing and marketing of diagnostics entails an inherent risk of product liability and personal injury claims
29. 29All of our diagnostic technology development and our clinical services are performed at two laboratories, and in the event either or both of these facilities were to be affected by a termination of the lease or a man-made or natural disaster, our operations could be severely impaired
30. 30An impairment in the carrying value of our intangible assets could negatively affect our results of operations
31. 31Governmental payers and health care plans have taken steps to control costs, which could negatively affect our business
32. 32and changes impact our products that are reimbursed under the Medicare Physician Fee Schedule (“MPFS”), or the Clinical Laboratory Fee Schedule (“CLFS”). Further, CMS and state Medicaid agencies may adopt regulations and policies that change, limit or exclude coverage for our products and services
33. 33Changes in payer mix could have a material adverse impact on our net sales and profitability
34. 34Our laboratories require ongoing CLIA certification, and we cannot guarantee that our laboratories will pass all future certification inspections
35. 35We believe that we are in compliance with all applicable laboratory requirements, but no assurances can be given that our laboratories will pass all future certification inspections
36. 36Most recently, on April 29, 2024, the FDA published a final rule on LDTs, in which FDA outlines its plans to end enforcement discretion for many LDTs in five stages over a four-year period
37. 37Failure to comply with HIPAA could be costly
38. 38Our failure to comply with any applicable government laws and regulations or otherwise respond to claims relating to improper handling, storage or disposal of hazardous chemicals that we use may adversely affect our results of operations
39. 39We may become subject to the Anti-Kickback Statute, Stark Law, False Claims Act, Civil Monetary Penalties Law and may be subject to analogous provisions of applicable state laws and could face substantial penalties if we fail to comply with such laws
40. 40Civil Monetary Penalties Law
41. 41We cannot be certain that measures taken to protect our intellectual property will be effective
42. 42If any of our owned patent applications do not issue as patents in any jurisdiction, we may not be able to compete effectively
43. 43We depend on certain technologies that are licensed to us. We do not control these technologies and any loss of our rights to them could prevent us from selling some of our products
44. 44If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed
45. 45If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
46. 46Third-party claims of intellectual property infringement, misappropriation or other violations may prevent or delay our product discovery and development efforts and have a material adverse effect on our business
47. 47Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
48. 48We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and unsuccessful
49. 49Changes to the patent law in the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates
50. 50Third parties may assert ownership or commercial rights to inventions we develop
51. 51Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets
52. 52We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world
53. 53Intellectual property rights do not necessarily address all potential threats to our competitive advantage

Risks Related to Our Common Stock

1. 54The price of our common stock may fluctuate significantly, which could negatively affect us and holders of our common stock
2. 55The price of our stock may be vulnerable to manipulation
3. 56Although our common stock is listed on The Nasdaq Capital Market (“Nasdaq”), we may be unable to continue to satisfy the listing maintenance requirements and rules. If we are unable to satisfy Nasdaq’s criteria for maintaining our listing, our securities could be subject to delisting
4. 57Increased costs associated with corporate governance compliance may significantly impact our results of operations
5. 58Our internal control over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur
6. 59We have not paid dividends on our common stock in the past and do not expect to pay dividends on our common stock for the foreseeable future. Any return on investment may be limited to the value of our common stock
7. 60We may be at an increased risk of securities class action litigation
8. 61If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline
9. 62The sale or issuance of our common stock to, or through, AGP may cause significant dilution and the sale of the shares of common stock acquired by AGP, or the perception that such sales may occur, could cause the price of our common stock to fall
10. 63We have issued a substantial number of warrants and equity awards from our equity plans which are exercisable into shares of our common stock which could result in substantial dilution to the ownership interests of our existing stockholders
11. 64Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our diagnostic technologies or current or future development programs
12. 65The issuance of our common stock to creditors or litigants may cause significant dilution to our stockholders and cause the price of our common stock to fall
13. 66Improper timing of equity awards could result in regulatory scrutiny and reputational harm
14. 67Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price
15. 68Our amended and restated bylaws, as amended, designate specific courts in as the exclusive forum for certain litigation that may be initiated by the Company’s stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us
16. 69Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control, which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management
17. 70We are a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors