Q2 2024 Precipio Inc Earnings Call

Welcome to the Precipio second quarter 2024 shareholder update conference call. All participants will be in a listen-only mode. Should you need assistance, please send to a conference specialist by pressing the star key followed by zero.

Operator: Update Code. All participants will be in a listen-only mode.

Operator: All participants will be in a listen-only mode.

Operator: Should you need assistance, please send to a conference specialist by pressing the star key followed by zero. Please note that the conference is being recorded.

Operator: If you need assistance, please signal a conference specialist by pressing the star key followed by zero. Is that the conference is being recorded? statements made during this call contained forward-looking statements about our business, should not place undue reliance on forward-looking statements, and our subject to significant risks and uncertainties. These statements may be identified by words such as may, will, should, could, expect, 10, plan, anticipate, believe, may predict the tension, will cast continues, or the negative of these, or other words or terms of similar meaning.

Operator: Risk and uncertainties that could cause our actual results to differ materially from those set forth in any forward-looking statements include, and are not limited to, the matters listed under risk factors in our annual report on Form 10-K for the year ended December 31, 2023, which is on file with the Securities and Exchange Commission, as well as other risks detailed in our subsequent files with the Securities, These reports are available at www.sec.gov. Statements and information, including forward-looking statements, speak only to the date they are provided, unless an earlier date is indicated.

Operator: Statements made during this call, contain forward-looking statements about our business. You should not place undue reliance, on forward-looking statements, as these statements are based upon our current expectations, forecasts, and assumptions, and are subject to significant risks and uncertainties. These statements may be identified by words, such as may, will, should, could, expect, intend, plan, anticipate, believe, estimate, predict, potential, forecast, continue, or the negative of these terms or other words or terms of similar meaning.

Speaker Change: Is that that the conference is being recorded?

Operator: Risks and uncertainties that could cause our actual results, to differ materially from those set forth in any forward-looking statements include, but are not limited to, the matters listed under risk factors in our annual report on Form 10-K for the year ended December 31st, 2023, which is on file with the Securities and Exchange Commission as well as other risks detailed in our subsequent filings with the Securities and Exchange Commission.

Speaker Change: Statements made during this call contain forward-looking statements about our business. You should not place undue reliance on forward-looking statements, as these statements are based upon our current expectations, forecasts, and assumptions, and are subject to significant risks and uncertainties.

Operator: These reports are available at www.sec.gov.

Operator: Statements and information, including forward-looking statements, speak only to the date they are provided, unless an earlier date is indicated. We do not undertake any obligation, to publicly update any statements or information, including forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Operator: Now, let me turn the floor over to Ilan Daniele, Precipio's CEO.

Operator: Please go ahead.

Ilan Danieli: Thank you very much.

Speaker Change: These statements may be identified by words such as may, will, should, could,

Speaker Change: Expect, Intend, Plan, Anticipate, Believe, Estimate, Predict, Potential, Forecast, Continue, or the negative of these terms or other words or terms of similar meaning.

Speaker Change: Risk and uncertainties that could cause our actual results to differ materially from those set forth in any forward-looking statements include, and are not limited to, the matters listed under risk factors in our annual report on Form 10-K for the year ended December 31, 2020.

Speaker Change: 23, which is on file with the Securities and Exchange Commission, as well as other risks detailed in our subsequent filings with the Securities and Exchange Commission.

Speaker Change: These reports are available at www.sec.gov.

Operator: We do not undertake any obligation to publicly update any statements or information, pleading for a look, whether as a result of new information, future events, or otherwise, except as required by law. Now let me turn the floor over to Ilan Danieli. CEO. Please go ahead.

Speaker Change: Statements and information, including forward-looking statements, speak only to the date they are provided, unless an earlier date is indicated. We do not undertake any obligation to publicly update any statements or information, including forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Speaker Change: Now, let me turn the floor over to Ilan Danieli, Precipio's CEO . Please go ahead.

Ilan Danieli: Thank you very much. Good afternoon, everyone, and thank you for joining our 2024 Q2 shareholder update. I'd like to thank those of you who submitted questions. As always, I will try my best to address them during this call. As you saw in our recent thank you filing last week, we are on track to hit our goals this year. Revenue continued to grow with the pathology division reaching breakeven at the end of, And please inform that so far we've continued on that track, and in Q3 to date, we are exceeding our break-even target for the pathology.

Ilan Danieli: Good afternoon, everyone, and thank you for joining our 2024 Q2 shareholder update call.

Aaron Danieli: Thank you very much. Good afternoon, everyone, and thank you for joining our 2024 Q2 shareholder update call.

Ilan Danieli: I'd like to thank those of you who submitted questions.

Ilan Danieli: As always, I will try my best, to address them during this call.

Speaker Change: I'd like to thank those of you who submitted questions. As always, I will try my best to address them during this call.

Ilan Danieli: As you saw in our recent 10-Q filing last week, we are on track to hit our goals for this year. Revenue continued to grow with the pathology division, reaching break-even at the end of Q2. I'm pleased to inform that so far, we've continued on that track, and in Q3 to date, we are exceeding our break-even target for the pathology division. We have a solid team, our existing customer base is stable, and our new customer base is growing.

Speaker Change: as you saw in our recent thank you filing lastly we are on track to hit our goals this year

Speaker Change: Revenue continued to grow with the pathology division reaching break-even at the end of Q2.

Speaker Change: I'm pleased to inform that so far, we've continued on that track, and in Q3 to date, we are exceeding our break-even target for the pathology division.

Ilan Danieli: We have a solid team, our existing customer base is stable, and our new customer base is good. We will continue to build an excess cushion of revenue to ensure that the pathology division fulfills its purpose within the company's strategy, which is to serve as a cost-neutral, rapid R&D facility to develop our products, while itself remaining profitable and generating cash.

Speaker Change: We have a solid team, our existing customer base is stable, and our new customer base is growing.

Ilan Danieli: We will continue to build an excess cushion of revenue, to ensure that the pathology division fulfills its purpose within the company's strategy, which is to serve as a cost-neutral, rapid R&D facility to develop our products, while itself remaining profitable and generating cash to the company.

Speaker Change: We will continue to build an excess cushion of revenue to ensure that the pathology division fulfills its purpose within the company's strategy, which is to serve as a cost-neutral, rapid R&D facility to develop our product, while itself remaining profitable and generating cash for the company.

Ilan Danieli: In the product division, we also continue to make progress towards break-even. In the past, we discussed three large customers, that we are working with to go live with our heat-screen program, and when they do, this division will reach its target. Once we reach break-even for this division, the entire company will be profitable. In this quarter, two of the three customers have gone live, and are growing their volume and adding panels. We expect that by the end of this quarter, they will be in full-fledged activity, which means that going into Q4, we can expect that these customers will contribute to an increase in revenue.

Ilan Danieli: In the product division, we also continue to make progress towards breakeven. In the past, we discussed three large customers that we are working with to go live with our heat scheme program, and when they do, this division will reach its target. Once we reach vacancy for this division, the entire company will be processed. In this quarter, 2 of the 3 customers have gone live and are growing their volume and adding panels.

Ilan Danieli: The third customer is still in progress and is working through several operational issues, before they go live. We are working diligently with them in order to ensure that this third customer will also, be fully onboarded too.

Speaker Change: In the product division, we also continue to make progress towards breakeven. In the past, we discussed three large customers that we are working with to go live with our Hiebsching program, and when they do, this division will reach its target. Once we reach breakeven for this division, the entire company will be profitable.

Ilan Danieli: We expect that by the end of this quarter, they will be in full-fledged activity, which means that going into Q4, we can expect that these customers will contribute to an increase in revenue. The third customer is still in progress and is working through several operational issues before they go live.

Speaker Change: In this quarter, two of the three customers have gone live and are growing their volume and adding panels.

Speaker Change: We expect that by the end of this quarter, they will be in full-fledged activity, which means that going into Q4, we can expect that these customers will contribute to an increase in revenue.

Speaker Change: The third customer is still in progress and is working through several operational issues before they go live. We are working diligently with them in order to ensure that this third customer will also be fully onboarded too.

Ilan Danieli: We are working diligently with them in order to ensure that this third customer will also be fully onboarded too. Of course, we have quite a few other small and midsize customers that are either in the process or have gone live during Q2, and we're starting to see their orders come in. Each of these customers forms yet another building block of recurring revenue to the company and brings us closer to hitting our break-even target.

Ilan Danieli: Of course, we have quite a few other small and midsize customers that are either in the, process or have gone live during Q2, and we're starting to see their orders come in. Each of these customers forms yet another building block of recurring revenue to the, company and brings us closer to hitting our break-even target.

Speaker Change: Of course, we have quite a few other small and mid-sized customers that are either in the process or have gone live during Q2, and we're starting to see their orders come in. Each of these customers forms yet another building block of recurring revenue to the company and brings us closer to hitting our break-even target.

Ilan Danieli: In the previous shareholder call, I commented on our work with the distributors to revamp the working relations with them and identify the recipe for success. We worked closely with the management teams of our distributors to formulate a plan, and in Q2, we began to put it in place.

Ilan Danieli: In the previous shareholder call, I commented on our work with the distributors to revamp, the working relations with them and identify the recipe for success. We work closely with the management teams of our distributors to formulate a plan, and, in Q2, we began to put it in place. We've begun to see the fruits of the new recipe with our distributors in the form of better, customer targeting, more introductions and conversations with the right decision makers, and progress towards bringing those customers onboard.

Speaker Change: In the previous shareholder call, I commented on our work with the distributors to revamp the working relations with them and identify the recipe for success.

Speaker Change: We worked closely with the management teams of our distributors to formulate a plan, and in Q2, we began to put it in place.

Ilan Danieli: We've begun to see the fruits of the new recipe with our distributors in the form of better customer targeting, more introductions and conversations with the right decision makers, and progress towards bringing those customers on board. Some of you have asked, why are we spending time and effort with distributors when, so far, we've been more successful with our direct sales approach? The reason is we believe that distributors are the key to scaling up the distribution.

Speaker Change: we'vebegun to see the frth of the new recipe of our our distributors in the form of better customer targeting more introctions and conversations with the right decision makers and progress tolwardsge ving those customers on board

Ilan Danieli: Some of you have asked, why are we spending time and effort with the distributors when, so far we've been more successful with our direct sales approach? The reason is we believe that distributors are the key to scaling up the business. Although for now, we're focused on reaching profitability, the total market just for the, HeapScreen product is approximately $400 million annually in the U.S. and a similar amount worldwide. We are not even at 1% of that market share, and the way to scale up is through our distributors. Our U.S. distributors, Cardinal Health, Thermo Fisher, and McKesson, collectively employ, hundreds of sales reps that have spent years building relationships with customers.

Speaker Change: Some of you have asked, why are we spending time and effort with distributors when so far we've been more successful with our direct sales approach?

Speaker Change: The reason is we believe that distributors are the key to scaling up the business.

Ilan Danieli: Although for now we're focused on reaching profitability, the total market just for the heme screen product is approximately $400 million annually in the U.S. and a similar amount worldwide. We're not even at 1% of that market. And the way to scale up is through our distribution. Our U.S. distributors, Hardin O'Hale, Thermo Fisher, and McKesson, collectively employ hundreds of sales reps that have spent years building relationships with customers. They know who the decision makers are within those customers and what is the process and best approach to sell product into the market.

Speaker Change: Although for now we're focused on reaching profitability, the total market just for the heme screen product is approximately 400 million dollars annually in the U.S. and a similar amount worldwide.

Speaker Change: we are not even at one percent of that market sha

Speaker Change: and the way to scale up is through our distributors.

Speaker Change: Our U.S. distributors, Cardinal Health, Thermo Fisher and McKesson, collectively employ hundreds of sales reps that have spent years building relationships with customers. They know who the decision makers are within those customers and what is the process and best approach to sell product into them.

Ilan Danieli: They know who the decision makers are within those customers and what is the process and, best approach to sell product into them.

Ilan Danieli: And most importantly, they have access to these customers. It's no secret that in the healthcare field, leveraging a distribution network has the potential for a business to scale up far more efficiently and rapidly by tapping into those established channels, expertise, and resources, and enabling faster market penetration and broader reach, as opposed to attempting to go only direct.

Ilan Danieli: And most importantly, they have access to these customers. It's no secret that in the healthcare field, leveraging a distribution network has the, potential for a business to scale up far more efficiently and rapidly by tapping into those established channels, expertise, and resources, and enabling faster market penetration and broader reach, as opposed to attempting to go only direct. Therefore, as we establish our presence in the market and build our customer base, we, believe that the way to scale up this business and capture significant market share is through our distribution channels. But like with any other partner you work with, it takes time to build successful relationships.

Speaker Change: And most importantly, they have access to these customers.

Speaker Change: it's no secret that in the health care field leveraging a distribution network has the potential for a business to scale up far more ficiently and rapidly by tapping into those established channels expertise resources to and enable faster market penetration and broader reach as opposed to acattempting to go only direct

Ilan Danieli: Therefore, as we establish our presence in the market and build our customer base, we believe that the way to scale up this business and capture significant market share is through our distribution, but like with any other partner you work with, it takes time to build successful relationships. We continue to work closely with our distributors to refine the program and messaging and to build relationships which will help foster growth in our sales.

Speaker Change: Therefore, as we establish our presence in the market and build our customer base, we believe that the way to scale up this business and capture significant market share is through our distribution channel.

Speaker Change: but like with any other partner you work with it takes time to build asuccess relationships

Ilan Danieli: We continue to work closely with our distributors to refine the program and messaging and to, build relationships which will help foster growth in our sales.

Speaker Change: We continue to work closely with our distributors to refine the program and messaging and to build relationships which will help foster growth in our sales.

Ilan Danieli: Next, I'd like to discuss our cash position. As you saw in Q2, we actually had an increase in cash of approximately $300,000.

Ilan Danieli: Next, I'd like to discuss our cash preserve. As you saw in Q2, we actually had an increase in cash of approximately $300,000. While this is terrific news, and yes, we are getting close, this is not to be confused with us being profitable just yet. We're still dealing with the aftermath issues from the changed health care hack earlier this year, including fund transfers from changed health care, delayed payments from Medicare and other payers, and we've not yet returned to a steady state of billing collection.

Speaker Change: Next, I'd like to discuss our cash position.

Speaker Change: As you saw in Q2, we actually had an increase in cash of approximately $300,000.

Ilan Danieli: While this is terrific news, and yes, we are getting close, this is not to be confused, with us being profitable just yet.

Speaker Change: While this is terrific news, and yes, we are getting close, this is not to be confused with us being profitable just yet.

Ilan Danieli: We're still dealing with the aftermath issues from the change healthcare hack earlier this, year, including fund transfers from change healthcare, delayed payments from Medicare and other payers, and we've not yet returned to a steady state of billing collection. However, we believe that the situation is getting much better, and we are moving towards, returning to that stable situation we had prior to the hack.

Speaker Change: We're still dealing with the aftermath issues from the Change Healthcare hack earlier this year, including fund transfers from Change Healthcare, delayed payments from Medicare and other payers, and we've not yet returned to a steady state of billing collection.

Ilan Danieli: However, we believe that the situation is getting much better and we are moving towards returning to that stable situation we had prior to the hack. From an operational perspective, we are reducing our cash burn and we're moving towards break even. And as we stand today, we believe that we have sufficient cash to meet our obligations and reach that target of profitability by year end. You've heard me say this many times, it's time for our company to be financially independent and stand on our own two feet. I still believe that we have sufficient resources to reach that. Next, I'd like to provide an update on our process with the FDA. We submitted to the FDA the required materials for our pre-submission meeting.

Speaker Change: however we believe that the situation is getting much better than we are moving towards returning to that stable situation we had prior tohave

Ilan Danieli: From an operational perspective, we are reducing our cash burn and moving towards break-even. And as we stand today, we believe that we have sufficient cash to meet our obligations, and reach that target of profitability by year end.

Speaker Change: From an operational perspective, we are reducing our cash burn and moving towards break-even.

Speaker Change: And as we stand today, we believe that we have sufficient cash to meet our obligations and reach that target of profitability by year end.

Ilan Danieli: You've heard me say this many times, it's time for our company to be financially independent, and stand on our own two feet. I still believe that we have sufficient resources to reach that point.

Speaker Change: You've heard me say this many times, it's time for our company to be financially independent and stand on our own two feet. I still believe that we have sufficient resources to reach that point.

Ilan Danieli: Next, I'd like to provide an update on our process with the FDA. We submitted to the FDA the required materials for our pre-submission meeting. Those materials have been accepted and the meeting with the FDA has been scheduled for, later this year.

Ilan Danieli: Those materials have been accepted, and the meeting with the FDA has been scheduled for later this year. We feel that we are in a good position to submit our application to the FDA soon after the meeting, and we hope to receive approval sometime in 2025. We're still seeing in the market significant confusion around the FDA ruling, both from customers who are not sure how to handle the situation and from manufacturers who have not yet decided what they're going to do.

Speaker Change: next i'd like to provide an update on our process with the fda

Speaker Change: we submitted to the fda the required materials for our please submission meeting

Speaker Change: Those materials have been accepted, and the meeting with the FDA has been scheduled for later this year. We feel that we are in a good position to submit our application to the FDA soon after the meeting, and we hope to receive approval sometime in 2025.

Ilan Danieli: We feel that we are in a good position to submit our application to the FDA soon after, the meeting and we hope to receive approval sometime in 2025.

Ilan Danieli: We're still seeing in the market significant confusion around the FDA ruling, both from, customers who are not sure how to handle the situation and from manufacturers who have not yet decided what they're going to do.

Speaker Change: We're still seeing in the market significant confusion around the FDA ruling, both from customers who are not sure how to handle the situation and from manufacturers who have not yet decided what they're going to do. We actually view this as a competitive advantage for us and believe that this ruling will weed out quite a few of the competitors.

Ilan Danieli: We actually view this as a competitive advantage for us and believe that this ruling will weed out quite a few of the. Once received, we believe having an SBA seal of approval on our product will help us gain further market share and provide additional credibility to our product.

Ilan Danieli: We actually view this as a competitive advantage for us and believe that this ruling will weed, out quite a few of the competitors.

Ilan Danieli: Once received, we believe having an FDA seal of approval on our product will help us gain, further market share and provide additional credibility to our product.

Speaker Change: Once received, we believe having an SBA seal of approval on our product will help us gain further market share and provide additional credibility to our product.

Ilan Danieli: Finally, I'd like to comment on our share price performance. For the recent months, we've been hovering around the $5 to $6 range and it seems that, the share price is at least stable and no longer suffers from the tremendous sorting pressures we used to experience. So, that's a good thing.

Ilan Danieli: Finally, I'd like to comment on our SharePrice performance. For the recent months, we've been hovering around the $5 to $6 range, and it seems that the share price is at least stable and no longer suffers from the tremendous shorting pressures we used to experience. So that's a good thing.

Speaker Change: Finally, I'd like to comment on our SharePrice performance.

Speaker Change: For the recent months, we've been hovering around the $5 to $6 range, and it seems that the share price is at least stable and no longer suffers from the tremendous shorting pressures we used to experience. So that's a good thing.

Ilan Danieli: Having said that, if you take our Q2 revenues of $4.4 million, which translates into about $17.5 million annualized run rate, this still equates to a market cap of less than 0.5 times our revenue multiplier. Looking at comparables in the market and at the company's situation, this doesn't seem to us, and to many outside observers, as a reasonable multiple. So we ask ourselves, what's keeping the stock price at its current place? We consider it two-factor.

Ilan Danieli: Having said that, if you take our Q2 revenues of $4.4 million, which translates into about, $17.5 million annualized run rate, this still equates to a market cap of less than 0.5 times our revenue multiple.

Speaker Change: Having said that, if you take our Q2 revenues of $4.4 million, which translates into about $17.5 million annualized run rate, this still equates to a market cap of less than 0.5 times our revenue multiple.

Ilan Danieli: Looking at comparables in the market and at the company situation, this doesn't seem to, us and to many outside observers as a reasonable multiple.

Speaker Change: looking comparableables in the market and at the company's situation this doesn't seem to us and to many outside observers as a reasonable multiple

Ilan Danieli: So, we ask ourselves, what's keeping the stock price at its current place?

Speaker Change: So we ask ourselves, what's keeping the stock price, and it's not a place.

Ilan Danieli: The first is that the market is still skeptical of our performance, our revenue growth, and our cash needs, and believes we will still need to raise the load cap. As we continue on track, the next couple of quarters will hopefully dissolve this notion. The second factor is that the company and me personally have not spent any significant time and resources on the IR side of this investor-led initiative.

Ilan Danieli: We consider two factors. The first is that the market is still skeptical of our performance, our revenue growth, and, our cash needs and believes we will still need to raise the looted capital. As we continue on track, the next couple of quarters will hopefully dissolve this notion, entirely.

Speaker Change: We consider two factors.

Speaker Change: The first is that the market is still skeptical of our performance, our revenue growth, and our cash needs, and believes we will still need to raise the load of tech.

Speaker Change: As we continue on track, the next couple of quarters will hopefully dissolve this notion entirely.

Ilan Danieli: The second factor is that the company and me personally have not spent any significant, time and resources on the IR side of the investor relations.

Speaker Change: The second factor is that the company, and me personally, have not spent any significant time and resources on the IR side of the investor relations.

Ilan Danieli: All companies, and especially micro-companies such as ours, battle for investor attention and work to build their presence and brand within the investment community. For the past few years, we've spent our effort building our business and have spent very little time on the IRC. Our plan is that upon achieving our goals by the end of this year and demonstrating to the market that we are indeed a profitable company, with a growing customer base, with a backlog and pipeline of new business and a roadmap to scale this business to our distributors.

Ilan Danieli: All companies, and especially micro-companies such as ours, battle for investor attention, and work to build their presence and brand within the investment community.

Speaker Change: All companies, and especially micro-companies such as ours, battle for investor attention and work to build their presence and brand within the investment community.

Ilan Danieli: Over the past few years, we've spent our effort building our business and have spent, very little time on the IR side. Our plan is that upon achieving our goals by the end of this year and demonstrating, to the market that we are indeed a profitable company with a growing customer base, with a backlog and pipeline of new business, and a roadmap to scale this business to our distributors, then we have a story that we can go out and share with the investor community. A combination of presence and investor conferences and meetings, coupled with work on the, digital side, can help build a substantial audience of people who will potentially follow the company.

Speaker Change: For the past few years, we've spent our effort building our business and have spent very little time on the IR side.

Speaker Change: Our plan is that upon achieving our goals by the end of this year and demonstrating the market that we are indeed a profitable company, with a growing customer base, with a backlog and pipeline of new business, and a roadmap to scale this business to our distributors

Ilan Danieli: Then we have a story that we can go out and share with the investor community. A combination of presence at investor conferences and meetings, coupled with work on the digital side, can help build a substantial audience of people who will potentially follow the company, with his keynote speech. Please join me in welcoming him. I'm sure you can tell him from his perspective that he's a great entrepreneur. He's one of the best entrepreneurs in the world. Revenue to a number that is more in line with industry properties.

Speaker Change: Then, we have a story that we can go out and share with the investor community.

Speaker Change: A combination of presence at investor conferences and meetings, coupled with work on the digital side, can help build a substantial audience of people who will potentially follow the company.

Ilan Danieli: With continuous performance and results, that should translate into an increase in trading, volume and presumably a correction of our company's revenue multiple from its current, 0.5 times revenue to a number that is more in line with industry comparable.

Speaker Change: with continuous performance and results that should translate into an increase in trading volume and presumably a correction of our company's revenue multiple for its current 0.5 times.

Ilan Danieli: Needless to say, our company is working hard to achieve its business results, and the impact, of the business results on the company's share price is a key focal point at all times.

Speaker Change: revenue to a number that is more in line with industry comparable

Ilan Danieli: Needless to say, our company is working hard to achieve its business results, and the impact of the business results on the company's share price is a key focal point at all. In summary, we're in a good place, and I'm really excited to continue with the momentum we have. With the pathology division stabilized and exceeding its breakeven target, and product division heading in that direction, we have enough gas and tank to get there.

Speaker Change: Needless to say, our company is working hard to achieve its business results, and the impact of the business results on the company's share price is a key focal point at all times.

Ilan Danieli: In summary, we're in a good place and I'm really excited to continue with the momentum, we have. With the pathology division stabilized and exceeding its break-even target and product, division heading in that direction, we have enough gas in the tank to get there. I think the hard work will pay off when our company reaches its goals for 2024.

Speaker Change: In summary, we're in a good place, and I'm really excited to continue with the momentum we have. With the pathology division stabilized and exceeding its breakeven target, and province division heading in that direction, we have enough gas in the tank to get there. I think the hard work will pay off when our company reaches its goals for 2024.

Ilan Danieli: I think the hard work will pay off when our company reaches its goals in 2020. Furthermore, as you can see, we're also thinking about our strategy for 2025 in terms of scaling up the product business, as well as rekindling our IR strategy so that we can translate all the good work that our team has accomplished into shareholder value. I'd like to thank you for your support, and I look forward to connecting with you on our next quarterly call. Thank you, and have a nice day. Ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your line.

Ilan Danieli: Furthermore, as you can see, we're also thinking about our strategy for 2025 in terms of scaling, up the product business, as well as rekindling our IR strategy so that we can translate all the good work that our team has accomplished into shareholder value.

Speaker Change: Furthermore, as you can see, we're also thinking about our strategy for 2025 in terms of scaling up the product business as well as rekindling our IR strategy so that we can translate all the good work that our team has accomplished into shareholder value.

Ilan Danieli: I'd like to thank you for your support and I look forward to connecting with you on our, next quarterly call.

Speaker Change: I'd like to thank you for your support, and I look forward to connecting with you on our next quarterly call. Thank you, and have a nice evening.

Ilan Danieli: Thank you and have a nice evening.

Operator: Ladies and gentlemen, the conference has now concluded.

Operator: Update conference call. All participants will be in a listen only mode. Should you need assistance, please send a conference specialist by pressing the star key followed by zero. Please note that the conference is being recorded.

Operator: Update conference call. All participants will be in a listen only mode. Should you need assistance, please send a conference specialist by pressing the star key followed by zero.

Operator: We do thank you for attending today's presentation.

Speaker Change: Ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.

Operator: You may now disconnect your line.

Operator: Please note that the conference is being recorded. Statements made during this call has been forward-looking statements about our business. You should not place undue reliance on forward-looking statements as these statements are based upon our current expectations, forecast and assumptions, and are subject to significant risks and uncertainties. These statements may be identified by words such as may, will, should, could, expect, intent, plan, anticipate, believe, estimate, predict, potential, forecast, continue, or the negative of these terms, or other words or terms of similar meaning.

Operator: Statements made during this call has been forward-looking statements about our business. You should not place undue reliance on forward-looking statements as these statements are based upon our current expectations, forecast and assumptions, and are subject to significant risks and uncertainties. These statements may be identified by words such as may, will, should, could, expect, intent, plan, anticipate, believe, estimate, predict, potential, forecast, continue, or the negative of these terms, or other words or terms of similar meaning.

Operator: Risk and uncertainties that could cause our actual results to differ materially from these those set forth and many forward-looking statements include that are not limited to the matters listed under risk factors in our annual report on form 10K for the year ended December 31st, 2023, which is on file with the Securities and Exchange Commission, as well as other risk detailed and our subsequent filings with the Securities and Exchange Commission.

Operator: Risk and uncertainties that could cause our actual results to differ materially from these those set forth and many forward-looking statements include that are not limited to the matters listed under risk factors in our annual report on form 10K for the year ended December 31st, 2023, which is on file with the Securities and Exchange Commission, as well as other risk detailed and our subsequent filings with the Securities and Exchange Commission. These reports are available at www.suc.gov.

Operator: Statements and information including forward-looking statements speak only to the date they are provided unless an earlier date is indicated. They do not undertake any obligation to publicly update any statements or information, including forward-looking statements. Whether as a result of new information, future events, or otherwise, except as required by law.

Danny Elly: Now, let me turn the floor over to you on Danny Elly, for CPSCO. Please go ahead. Thank you very much.

Operator: These reports are available at www.suc.gov.

Danny Elly: Good afternoon, everyone, and thank you for joining our 2024 Q2 shareholders update call. I'd like to thank those of you who have been questioned, as always, I will try my best to address them during this call. As you saw in our recent thank you filing last week, we are on track to hit our goals this year. Rather than you continue to grow with the pathology division reaching Blakey even at the end of Q2.

Operator: Statements and information including forward-looking statements speak only to the date they are provided unless an earlier date is indicated. They do not undertake any obligation to publicly update any statements or information, including forward-looking statements. Whether as a result of new information, future events, or otherwise, except as required by law.

Operator: Now, let me turn the floor over to you on Danny Elly, for CPSCO.

Operator: Please go ahead.

Danny Elly: Thank you very much.

Danny Elly: I'm pleased to inform that so far, we've continued on that track, and in Q3 to date, we are exceeding our Blakey even target for the pathology division. We have a solid team, our existing customer base and stable, and our new customer base is growing. We will continue to build an excess cushion of revenue to ensure that the pathology division fulfills its purpose within the company's strategy, which is to serve as a cost-neutral rapid IMD facility to develop our product, while itself remaining profitable and generating cash to the company.

Danny Elly: Good afternoon, everyone, and thank you for joining our 2024 Q2 shareholders update call.

Danny Elly: I'd like to thank those of you who have been questioned, as always, I will try my best to address them during this call.

Danny Elly: As you saw in our recent thank you filing last week, we are on track to hit our goals this year.

Danny Elly: In the product division, we also continue to make progress towards Blakey even. In the past, we discussed three large customers that we are working with to go live with our mainstream program, and when they do, this division will reach its target. Once we reach Blakey even for this division, the entire company will be possible. In this quarter, two of the three customers have gone live and are growing their volume and adding panel.

Danny Elly: We expect that by the end of this quarter, they will be in full flood activity, which means that going into Q4, we can expect that these customers will contribute to an increase in revenue. The third customer is still in progress and is working through several operational issues before they go live. We are working diligently with them in order to ensure that this clear customer will also be fully onboarded too. Of course, we have quite a few other small and mid-sized customers that are either in the process or have done live during Q2 and were starting to see their orders come in.

Danny Elly: Rather than you continue to grow with the pathology division reaching Blakey even at the end of Q2.

Danny Elly: I'm pleased to inform that so far, we've continued on that track, and in Q3 to date, we are exceeding our Blakey even target for the pathology division.

Danny Elly: We have a solid team, our existing customer base and stable, and our new customer base is growing. We will continue to build an excess cushion of revenue to ensure that the pathology division fulfills its purpose within the company's strategy, which is to serve as a cost-neutral rapid IMD facility to develop our product, while itself remaining profitable and generating cash to the company.

Danny Elly: In the product division, we also continue to make progress towards Blakey even.

Danny Elly: In the past, we discussed three large customers that we are working with to go live with our mainstream program, and when they do, this division will reach its target.

Danny Elly: Once we reach Blakey even for this division, the entire company will be possible.

Danny Elly: In this quarter, two of the three customers have gone live and are growing their volume and adding panel. We expect that by the end of this quarter, they will be in full flood activity, which means that going into Q4, we can expect that these customers will contribute to an increase in revenue.

Danny Elly: Each of these customers forms yet another building block of the current revenue to the company and brings us closer to hitting our great-great-great target. In the previous shareholder call, I commented on our work with the distributors to revamp the working relationship and identify the rest of your success. We were closely with the management teams of our distributors to formulate a plan and in Q2, we began to put it in place. We began to see the fruits of the new recipe of our distributors in the form of better customer targeting, more introductions and conversations with the right decision makers and progress towards bringing those customers onboard.

Danny Elly: The third customer is still in progress and is working through several operational issues before they go live. We are working diligently with them in order to ensure that this clear customer will also be fully onboarded too.

Danny Elly: Of course, we have quite a few other small and mid-sized customers that are either in the process or have done live during Q2 and were starting to see their orders come in.

Danny Elly: Each of these customers forms yet another building block of the current revenue to the company and brings us closer to hitting our great-great-great target.

Danny Elly: In the previous shareholder call, I commented on our work with the distributors to revamp the working relationship and identify the rest of your success. We were closely with the management teams of our distributors to formulate a plan and in Q2, we began to put it in place. We began to see the fruits of the new recipe of our distributors in the form of better customer targeting, more introductions and conversations with the right decision makers and progress towards bringing those customers onboard.

Danny Elly: Some of you asked, why are we spending time and effort with the distributors when so far we've been more successful with our direct sales approach? The reason is we believe that the distributors are the key to scaling up the business. Although for now, we've focused on reaching profitability, the target market just for the heat-screen product is approximately $400 million annually in the U.S, and the similar amounts worldwide. We are not even at 1% of that market share.

Danny Elly: Some of you asked, why are we spending time and effort with the distributors when so far we've been more successful with our direct sales approach? The reason is we believe that the distributors are the key to scaling up the business.

Danny Elly: Although for now, we've focused on reaching profitability, the target market just for the heat-screen product is approximately $400 million annually in the U.S, and the similar amounts worldwide. We are not even at 1% of that market share.

Danny Elly: And the way to scale up is through our distributors. Our U.S, distributors, Hartnell Hell, Thermo Fisher and McKesson collectively employ hundreds of sales reps that have spent years building relationships with customers. They know who the decision makers are within those customers and what is the process and best approach to sell product into them. And most importantly, they have access to these customers. It's not secret that in the healthcare field, leveraging a distribution network has the potential for business to scale up far more efficiently and rapidly by capping into those established channels, expertise and resources, and enabling faster market penetration and broader reach as opposed to attempting to go only direct. Therefore, as we establish our presence in the market and build our customer base, we believe that the way to scale up this business and capture significant market share is through our distribution channel.

Danny Elly: And the way to scale up is through our distributors. Our U.S, distributors, Hartnell Hell, Thermo Fisher and McKesson collectively employ hundreds of sales reps that have spent years building relationships with customers. They know who the decision makers are within those customers and what is the process and best approach to sell product into them. And most importantly, they have access to these customers. It's not secret that in the healthcare field, leveraging a distribution network has the potential for business to scale up far more efficiently and rapidly by capping into those established channels, expertise and resources, and enabling faster market penetration and broader reach as opposed to attempting to go only direct.

Danny Elly: Therefore, as we establish our presence in the market and build our customer base, we believe that the way to scale up this business and capture significant market share is through our distribution channel. But like with any other partner you work with, it takes time to build the customer relationships. We continue to work closely with our distributors to refine the program and messaging and to build the relationships with the help cost of growth in our sales.

Danny Elly: But like with any other partner you work with, it takes time to build the customer relationships.

Danny Elly: We continue to work closely with our distributors to refine the program and messaging and to build the relationships with the help cost of growth in our sales.

Danny Elly: Next, I'd like to discuss our cash position. As you saw in Q2, we actually had an increase in cash at approximately $300,000.

Danny Elly: Next, I'd like to discuss our cash position. As you saw in Q2, we actually had an increase in cash at approximately $300,000. While this is terrific news, and yes, we are getting close, this is not to be confused with us being profitable just yet. We're still dealing with the aftermath issues from the change healthcare hack earlier this year, including fund transfers from change healthcare, delayed payments from Medicare and other payers, and we've not yet returned to a steady state of building collection.

Danny Elly: While this is terrific news, and yes, we are getting close, this is not to be confused with us being profitable just yet.

Danny Elly: We're still dealing with the aftermath issues from the change healthcare hack earlier this year, including fund transfers from change healthcare, delayed payments from Medicare and other payers, and we've not yet returned to a steady state of building collection. However, we believe that the situation is getting much better and we are moving towards storage returning to that stable situation we have perhaps from an operational perspective, we are reducing our cash burn and we move and moving towards great ease.

Danny Elly: And as we stand today, we believe that we have sufficient cash to meet our obligations and reach that target of profitability by year S.

Danny Elly: However, we believe that the situation is getting much better and we are moving towards storage returning to that stable situation we have perhaps from an operational perspective, we are reducing our cash burn and we move and moving towards great ease. And as we stand today, we believe that we have sufficient cash to meet our obligations and reach that target of profitability by year S. We heard me say this many times. It's time for our company to be financially dependent and stand on our own two feet. I still believe that we have sufficient resources to reach that point.

Danny Elly: We heard me say this many times.

Danny Elly: It's time for our company to be financially dependent and stand on our own two feet. I still believe that we have sufficient resources to reach that point.

Danny Elly: Next, I'd like to provide an update on our process with the FDA. We submitted to the FDA the required materials for our previous admission meeting. Those materials have been accepted and the meeting with the FDA has been scheduled for later this year.

Danny Elly: Next, I'd like to provide an update on our process with the FDA. We submitted to the FDA the required materials for our previous admission meeting. Those materials have been accepted and the meeting with the FDA has been scheduled for later this year. We feel that we are the good position to submit our application to the FDA soon after the meeting, and we hope to receive approval sometime in 2025. We're still seeing in the market the good confusion around the FDA ruling, both from customers who are not sure how to handle the situation and for manufacturers who have not yet decided what they're going to do.

Danny Elly: We feel that we are the good position to submit our application to the FDA soon after the meeting, and we hope to receive approval sometime in 2025.

Danny Elly: We're still seeing in the market the good confusion around the FDA ruling, both from customers who are not sure how to handle the situation and for manufacturers who have not yet decided what they're going to do.

Danny Elly: We actually view this as a competitive advantage for us and believe that this ruling will lead out quite a few of the competitors.

Danny Elly: We actually view this as a competitive advantage for us and believe that this ruling will lead out quite a few of the competitors. Once received, we believe having an FDA feel of approval on our product will help us gain further market share and provide additional credibility to our product.

Danny Elly: Once received, we believe having an FDA feel of approval on our product will help us gain further market share and provide additional credibility to our product.

Danny Elly: Finally, I'd like to comment on our share price performance. For the recent months, we've been hovering around the $5-6 range and it seems the share price is at least stable and no longer suffers from the tremendous 40 pressures we use to experience.

Danny Elly: Finally, I'd like to comment on our share price performance. For the recent months, we've been hovering around the $5-6 range and it seems the share price is at least stable and no longer suffers from the tremendous 40 pressures we use to experience. So that's a good thing. Having said that, if you take our Q2 revenues of $4.4 million, which translates into about $17.5 million annualized run rate, this still equates to a market cap of less than 0.5 times our revenue multiple.

Danny Elly: So that's a good thing.

Danny Elly: Having said that, if you take our Q2 revenues of $4.4 million, which translates into about $17.5 million annualized run rate, this still equates to a market cap of less than 0.5 times our revenue multiple.

Danny Elly: Looking at the comparable in the market and at the company's situation, this doesn't seem to us and so many outside observers as a reasonable multiple.

Danny Elly: Looking at the comparable in the market and at the company's situation, this doesn't seem to us and so many outside observers as a reasonable multiple. So we ask yourself what's keeping the stock price at its front? We consider two factors. The first is the market is still skeptical of our performance, our revenue growth and our cash need and believes we will still need to raise the lose cap. As we continue on track, the next couple of quarters will hopefully dissolve this notion entirely.

Danny Elly: So we ask yourself what's keeping the stock price at its front?

Danny Elly: We consider two factors. The first is the market is still skeptical of our performance, our revenue growth and our cash need and believes we will still need to raise the lose cap. As we continue on track, the next couple of quarters will hopefully dissolve this notion entirely.

Danny Elly: The second factor is that the company and we personally have not spent any significant time and resources on the IR side of the investor relations. All companies and especially microcaps, companies such as ours, battle for investor attention and work to build their presence and brand within the investment community. For the past few years, we've spent our effort building our business and spent very little time on the IR side. Our plan is that upon achieving our goals by the end of this year and demonstrating the market that we are indeed a possible company, with a growing customer base, with a backlog and pipeline of new business and a roadmap to scale this business through our distributors, then we have a story that we can go out and share with the investor community.

Danny Elly: The second factor is that the company and we personally have not spent any significant time and resources on the IR side of the investor relations.

Danny Elly: All companies and especially microcaps, companies such as ours, battle for investor attention and work to build their presence and brand within the investment community.

Danny Elly: For the past few years, we've spent our effort building our business and spent very little time on the IR side. Our plan is that upon achieving our goals by the end of this year and demonstrating the market that we are indeed a possible company, with a growing customer base, with a backlog and pipeline of new business and a roadmap to scale this business through our distributors, then we have a story that we can go out and share with the investor community. A combination of presence and investor conferences and meetings, coupled with work on the digital side can help build a substantial audience of people who will potentially follow the company.

Danny Elly: A combination of presence and investor conferences and meetings, coupled with work on the digital side can help build a substantial audience of people who will potentially follow the company. With continuous performance and results, that should translate into an increased and trading volume and presumably presumably a correction of our company's revenue multiple for its current zero-fold pipeline revenue to a number that is more in line with industry comparable.

Danny Elly: With continuous performance and results, that should translate into an increased and trading volume and presumably presumably a correction of our company's revenue multiple for its current zero-fold pipeline revenue to a number that is more in line with industry comparable.

Danny Elly: Needless to say, our company is working hard to achieve its business result and the impact of the business result on the company's share price is a key focal point at all, in summary, we're in a good place and I'm really excited to continue with a momentum we have with the pathology division stabilized and exceeding its breaking target and province division heading in that direction.

Danny Elly: Needless to say, our company is working hard to achieve its business result and the impact of the business result on the company's share price is a key focal point at all, in summary, we're in a good place and I'm really excited to continue with a momentum we have with the pathology division stabilized and exceeding its breaking target and province division heading in that direction. We have enough gas and time to get there. I think the hard work will pay off when our company reaches its goals for 2024.

Danny Elly: We have enough gas and time to get there.

Danny Elly: I think the hard work will pay off when our company reaches its goals for 2024.

Danny Elly: Furthermore, as you can see, we're also thinking about our strategy for 2025 in terms of scaling up the product business as well as rekindling our IR strategy so that we can translate all the good work that our team has accomplished into shareholder value.

Danny Elly: Furthermore, as you can see, we're also thinking about our strategy for 2025 in terms of scaling up the product business as well as rekindling our IR strategy so that we can translate all the good work that our team has accomplished into shareholder value. I'd like to thank you for your support and I look forward to connecting with you on our next quarterly call.

Danny Elly: I'd like to thank you for your support and I look forward to connecting with you on our next quarterly call.

Operator: Thank you and have a nice view.

Danny Elly: Thank you and have a nice view.

Operator: Ladies and gentlemen, the conference has now concluded.

Operator: Ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your

Operator: We do thank you for attending today's presentation.

Operator: You may now disconnect your