PRPO Precipio, Inc.

Management Discussion

• Net Change in Cash. Cash increased by $0.5 million during the year ended December 31, 2019, compared to a decrease of less than $0.1 million during the year ended December 31, 2018.
• Cash Flows Used in Operating Activities. The cash flows used in operating activities of $9.1 million during the year ended December 31, 2019 included a net loss of $13.2 million, an increase in accounts receivable of $0.8 million, a decrease in accounts payable of $1.9 million and a decrease in operating lease liabilities of $0.2 million. These were partially offset by a decrease in other assets of $0.4 million and non-cash adjustments of $6.6 million. The non-cash adjustments to net loss include, among other things, depreciation and amortization, changes in provision for losses on doubtful accounts, warrant and derivative revaluations, stock based compensation, gains on settlements of liabilities, impairment of intangible assets and losses on the issuance of convertible notes.   The cash flows used in operating activities in the year ended December 31, 2018 included  net loss of $15.7 million, an increase in accounts receivable of $0.5 million and an increase in inventories of less than $0.1 million. These were partially offset a decrease in other assets of $0.1 million, an increase in accounts payable, accrued expenses and other liabilities of $0.6 million and by non-cash adjustments of $8.8 million. The non-cash adjustments to net loss include, among other things, depreciation and amortization, impairment of goodwill, changes in provision for losses on doubtful accounts, warrant and derivative revaluations, stock based compensation, and gains or losses on settlements of liabilities or debt and extinguishments of debt and convertible notes.
• Cash Flows Used In Investing Activities. Cash flows used in investing activities were $0.1 million for the year ended December 31, 2019 and 2018, respectively, resulting from purchases of property and equipment.