Filing summary
Entity and period: The request identifies Axe Compute Inc., but the supplied filing is Predictive Oncology Inc. (NASDAQ: POAI), Form 10-K for the fiscal year ended December 31, 2021, filed March 31, 2022. The figures below summarize Predictive Oncology; the filing does not provide standalone fourth-quarter results.
Business context
Predictive Oncology reported four segments: Helomics (precision-medicine testing and AI-enabled research), zPREDICTA (3D tumor models), Soluble (protein formulation and related services), and Skyline (STREAMWAY medical-fluid disposal systems). The company said it would focus resources on Helomics and zPREDICTA. It acquired zPREDICTA on November 24, 2021; the acquisition was funded with approximately $10.0 million in cash consideration.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $1.42 million | $1.25 million |
| Gross profit / margin | $0.93 million / 66% | $0.81 million / 64% |
| Operating loss | $20.43 million | $25.36 million |
| Net loss | $19.66 million | $25.88 million |
| Loss per common share | $0.36 | $2.21 |
| Cash used in operating activities | $12.21 million | $12.26 million |
| Cash used in investing activities | $10.61 million | $0.17 million |
| Cash provided by financing activities | $50.34 million | $12.95 million |
Revenue grew about 13%, while gross margin improved by two percentage points. Skyline generated $1.17 million of 2021 revenue; Soluble generated $233,293, Helomics $13,367, and zPREDICTA $90 after acquisition. STREAMWAY unit sales fell to 15 from 25 in 2020. The lower net loss chiefly reflects a smaller goodwill impairment than in 2020, partly offset by new impairment charges in 2021.
At year-end, cash and cash equivalents were $28.20 million, current assets $29.46 million, current liabilities $3.24 million, and total liabilities $3.51 million. The company reported no outstanding debt; liabilities included lease obligations. The approximate current ratio was 9.1. Accumulated deficit was $128.04 million. The company said available capital was expected to support its operating plan for the next 12 months and beyond, while also noting it might seek additional financing.
Material changes, outlook and risks
- Financing and dilution: 2021 equity offerings generated $50.52 million net, and warrant exercises generated $4.51 million. The offerings and exercises substantially increased common shares outstanding. At year-end, 31.70 million warrants were outstanding; a further $9.11 million remained available under an equity line, subject to shareholder approval and other conditions.
- Acquisition and impairments: The zPREDICTA acquisition added $6.86 million of goodwill and $3.78 million of intangible assets. Helomics goodwill was fully impaired during 2021, and the company also fully impaired Helomics intangible assets and acquired software, recording charges of $2.81 million, $2.89 million, and $1.25 million, respectively.
- Management outlook: Management planned to commercialize Helomics AI-driven predictive-model services in 2022 and reported that validation of the Discovery 21 proof of concept was completed in January 2022. It anticipated net losses at least through the remainder of 2022. No specific revenue or earnings guidance was provided.
- Listing and operating risks: In February 2022, Nasdaq notified the company that its bid price had remained below $1.00 for 30 consecutive trading days. The stated deadline to regain compliance was August 16, 2022. The filing also highlights continuing operating cash burn, dependence on future revenue and financing, COVID-related supplier and sales disruptions, competition, regulatory exposure, and risks integrating zPREDICTA.
- Controls and contingencies: Management concluded disclosure controls and internal control over financial reporting were effective at December 31, 2021. The filing reports no material legal proceedings and no off-balance-sheet transactions. The auditor’s opinion on the financial statements was unqualified; it did not express an opinion on internal control.
Important facts for investors to verify
- Confirm the intended issuer: the supplied 10-K is for Predictive Oncology, not Axe Compute.
- Review subsequent filings for actual 2022 revenue, cash burn, financing needs, and whether the company’s cash runway matched management’s expectation.
- Track commercialization progress and customer traction for Helomics and zPREDICTA, including whether the Discovery 21 validation translated into paid work.
- Assess the impact of the zPREDICTA acquisition, including integration results and the assumptions supporting acquired intangible-asset valuations and goodwill.
- Review share issuance, outstanding warrants, equity-line conditions, and any later financing for potential dilution.
- Verify the outcome of Nasdaq’s minimum-bid-price deficiency and any actions taken to maintain the listing.