Note 1 - Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Predictive Oncology Inc. (“Predictive Oncology” or the “Company”) is a knowledge-driven company focused on applying artificial intelligence (“AI”) to support the discovery and development of optimal cancer therapies, which can ultimately lead to more effective treatments and improved patient outcomes. Predictive Oncology uses AI and its proprietary biobank of 150,000+ tumor samples, categorized by tumor type, to provide actionable insights about drug compounds to improve the drug discovery process and increase the probability of drug compound success. The Company also creates and develops tumor-specific 3D cell culture models mimicking the physiological environment of human tissue, enabling better-informed decision-making during drug development. The Company’s suite of solutions supports oncology drug development from early discovery to clinical trials.

Predictive Oncology also recently adopted a digital asset treasury strategy (the “Treasury Strategy”) focused on the Aethir token (“ATH”), the native utility token of the Aethir network, to create a Strategic Compute Reserve. Through its holdings of ATH, the Company will function as an operator on the Aethir network, strengthening Aethir’s ability to provide the global infrastructure layer for the future of AI and democratize access to AI infrastructure. On September 29, 2025, the Company announced the adoption of the Treasury Strategy, including the pricing of two private placements to support the adoption, and began accumulating ATH on October 7, 2025. For further discussion of the private placements supporting the Treasury Strategy, which were entered into on September 29, 2025 and closed on October 7, 2025, refer to Note 10 – Derivative Liability for Cryptocurrency Private Placement and Note 15 – Subsequent Events.

On January 1, 2025, the Company entered into a binding letter of intent (the “LOI”) with Renovaro, Inc. (NASDAQ: RENB) (“Renovaro”) for Predictive Oncology to be acquired by Renovaro (the “Renovaro Merger”). On February 28, 2025, Predictive Oncology entered into an extension agreement with Renovaro (the “Extension Agreement”), pursuant to which the parties amended certain terms of the LOI, including to extend the outside termination date of the LOI from February 28, 2025 to March 31, 2025. No definitive purchase agreement was executed as of March 31, 2025 and the LOI terminated on that date, pursuant to its terms. Predictive Oncology has no further obligations with respect to the Renovaro Merger, including under the LOI or the Extension Agreement. On April 3, 2025, Predictive Oncology’s Board of Directors notified Renovaro of the Company’s decision to discontinue discussions regarding the proposed merger between the two companies. See Note 7 – Contingencies for further discussion.

During the first quarter of 2025, the Company’s former Eagan operating segment, which produced the FDA-cleared STREAMWAY System and associated products for automated medical fluid waste management and patient-to-drain medical fluid disposal, met the criteria to be reported as discontinued operations. See Note 2 – Discontinued Operations for further discussion.

As a result of the decision to discontinue the Eagan operating segment, the Company now operates as one operating segment focused on applying AI to support the discovery and development of optimal cancer therapies. See Note 14 – Segment Information for further discussion.

Aethir Treasury Strategy

On September 29, 2025, the Company announced the launch of its Treasury Strategy focused on ATH. Aethir is a leading decentralized physical infrastructure network developed by DCI Foundation, a Panama foundation company (“DCI”), that provides a decentralized graphics processing unit (“GPU”) network, connecting producers and consumers of GPU compute power at enterprise scale, supporting applications such as artificial intelligence computation, gaming and cloud workloads. ATH, the native token of the Aethir network, is a utility token used for GPU rentals, staking, validation and the provision of network rewards on the Aethir network. ATH functions as a proxy for a unit of GPU compute power and serves as a medium of exchange and unit of incentives for participants in the Aethir network. Participants in the Aethir network can generate yield or other rewards by staking or lending ATH or by otherwise serving as a source of ATH liquidity.

Pursuant to the Treasury Strategy, the Company intends to continue acquiring additional ATH in the open market and to earn yield on its ATH treasury holdings by engaging in ATH staking and other activities. As a holder of ATH, the Company accrues unrealized gains or losses from any appreciation or depreciation, as applicable, in the value of ATH tokens, which trade on various cryptocurrency exchanges.

The Treasury Strategy is overseen by the Cryptocurrency Subcommittee of the Company’s board of directors, as well as its Chief Investment Officer, who reports to such committee. In addition, the Company’s Treasury Strategy is managed by DNA Holdings Venture, Inc. (“DNA”) pursuant to the Asset Management Agreement (as defined below) and the Strategic Advisor Agreement (as defined below). DNA is permitted to stake and/or lend ATH in the Treasury Strategy.

In addition to operating its AI drug discovery and development business, the Company’s management is focusing its resources on the Treasury Strategy and a significant portion of the Company’s balance sheet will be allocated to holding ATH pursuant to its Treasury Strategy.

Currently the Treasury Strategy is primarily dedicated to ATH, and the Company does not intend to allocate treasury assets to other digital assets in the near term. As a result, the Company’s assets will be highly concentrated in a single digital asset. Adverse developments specific to ATH, its protocol, or its network could have a disproportionate impact on the Company’s financial condition and results of operations.

The Company’s Treasury Strategy is intended to bring value to its stockholders through the following:

● utilizing proceeds from equity and debt financings to purchase and hold ATH;

● staking the majority of the ATH in the Company’s treasury to earn a staking yield and turn the treasury into a productive asset;

● purchasing locked ATH at a discount to the current spot price; and

● selling the Company’s ATH holdings, whether on the open market, through block trades, or other negotiated transactions, for various reasons and at various times, including, in order to fund its working capital and general corporate needs.

Refer to the subheading “Risks and Uncertainties” below for further discussion regarding risks related to the Company’s Treasury Strategy.

Going Concern and Liquidity

These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

At the time of the issuance of the Company’s Form 10-Q for the quarterly period ended June 30, 2025, substantial doubt about the Company’s ability to continue as a going concern existed. The Company had incurred significant and recurring losses from operations for the past several years and, as of June 30, 2025, had an accumulated deficit of $184,939,606. The Company had cash and cash equivalents of $506,078 as of June 30, 2025, and needed to raise significant additional capital to meet its operating needs. The Company had short-term obligations of $3,845,439 and long-term operating lease obligations of $1,243,327 as of June 30, 2025. During the six months ended June 30, 2025, the Company incurred negative cash flows from continuing operating activities of $4,280,632.

As disclosed in Note 15 – Subsequent Events, on October 7, 2025, the Company closed two private placements, pursuant to which the Company received aggregate cash gross proceeds of approximately $50.8 million. The Company believes that its working capital and cash position will be sufficient to fund its on-going operations for a period of at least 12 months subsequent to the issuance of these condensed consolidated financial statements.

Reverse Stock Split

On September 19, 2025, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation, as amended, to effect a one-for-fifteen reverse stock split of the Company’s common stock. On September 29, 2025, the Company completed a one-for-fifteen reverse stock split that was effective for trading purposes on September 30, 2025. All numbers of shares and per-share amounts in this report have been adjusted to reflect the reverse stock split (“Reverse Stock Split”).

As a result of the Reverse Stock Split, every 15 shares of issued and outstanding common stock were combined into one issued and outstanding share of common stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split and any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the nearest whole share. The Reverse Stock Split did not change the total number of authorized shares of common stock or preferred stock.

NASDAQ Notice of Delisting and Actions to Regain Compliance

On November 20, 2024, the Company received a letter from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market as set forth in Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Requirement”), because the Company’s stockholders’ equity of $1,966,969, as reported in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024, was below the required minimum of $2.5 million, and because, as of November 20, 2024, the Company did not meet either of the alternative compliance standards, relating to market value of listed securities of at least $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years.

On June 9, 2025, the Company received a letter (the “Notice”) from the Staff of Nasdaq notifying the Company that because the Company had not regained compliance with the Stockholders’ Equity Requirement, the Staff had determined to delist the Company’s securities from The Nasdaq Capital Market. The Company was unable to complete its previously submitted plan of compliance within the 180-day extension period provided under the Listing Rules. On June 11, 2025, the Company submitted a request for a hearing before Nasdaq’s Hearings Panel (the “Panel”), which stayed the suspension of the Company’s securities and the filing of a Form 25-NSE at least pending issuance of the Panel’s decision following the hearing. A hearing before the Panel was held on July 17, 2025.

On July 8, 2025, the Company received a letter from the Staff indicating that the bid price for its common stock had closed below $1.00 per share for 30 consecutive business days, and that the Company was therefore not in compliance with the minimum bid price requirement for continued listing under Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The notification had no immediate effect on the listing of the Company’s common stock.

On July 17, 2025, the Company attended an oral hearing with the Panel, where the Company presented plans for coming into compliance with the continued listing standards, which included, but were not limited to, continued sales of common stock pursuant to the Company’s at-the-market offering, sales of common stock pursuant to the Company’s standby equity purchase agreement, expanding availability of the Company’s live cell ChemoFx drug response assay and business collaborations, as well as a potential reverse stock split. The Company also requested an exception from the continued listing standards through December 8, 2025, to provide the Company the ability to evidence compliance with the standards.

On July 23, 2025, the Company was notified by Nasdaq that the Panel had granted the Company’s request for continued listing on The Nasdaq Capital Market pursuant to an extension through December 8, 2025, to demonstrate compliance with all continued listing requirements, including the Stockholders’ Equity Requirement and Minimum Bid Price Requirement. The Company has taken actions to timely satisfy the terms of the Panel’s decision.

On September 29, 2025, the Company completed the Reverse Stock Split, which was effective for trading purposes on September 30, 2025. As a result, the Company’s stock price increased significantly, and the Company regained compliance with the Minimum Bid Price Requirement as confirmed by the Staff via a letter dated October 14, 2025.

For additional information regarding the actions the Company has taken to satisfy the terms of the Panel’s decisions related to the Stockholders’ Equity Requirement, refer to Note 15 – Subsequent Events to these condensed consolidated financial statements for additional information regarding the private placements that closed in October 2025.

Basis of Presentation and Principles of Consolidation

The Company has prepared the condensed consolidated financial statements and related unaudited financial information in the notes in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim condensed consolidated financial statements. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These interim condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments, which in the opinion of management, are necessary to present fairly the Company’s position, the results of its operations, and its cash flows for the interim periods. These interim condensed consolidated financial statements reflect all intercompany eliminations. These interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto contained in the Annual Report on Form 10-K filed with the SEC on March 31, 2025 (the “2024 10-K”). In addition, on July 18, 2025, the Company filed a Current Report on Form 8-K to retrospectively revise the Company’s annual consolidated financial statements and notes thereto that were initially filed with the SEC in the 2024 Form 10-K to reflect revisions to its reportable segments that were made in the first quarter of 2025 as a result of the disposal of the Company’s former Eagan operating segment described below. The retrospective revision to the consolidated financial statements does not impact previously reported consolidated operating income (loss) from operations, net income (loss), or earnings (loss) per share. The nature of the Company’s business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.

The Company had two wholly owned subsidiaries, Helomics Corporation and Skyline Medical Inc. (“Skyline Medical”), as of September 30, 2025 and December 31, 2024, and for the nine months ended September 30, 2025 and 2024. Skyline Medical remained a wholly owned subsidiary of Predictive Oncology following the March 14, 2025 asset purchase agreement between the Company and DeRoyal Industries, Inc., but the subsidiary’s ongoing activities are limited to wind down activities. The condensed consolidated financial statements include the accounts of the Company and these wholly owned subsidiaries after elimination of intercompany transactions and balances as of September 30, 2025 and December 31, 2024, and for the nine months ended September 30, 2025 and 2024.

Discontinued Operations

During the year ended December 31, 2024, the Company discontinued its former Birmingham operating segment. In March 2025, the Company disposed of its former Eagan operating segment. Disposal groups that meet the discontinued operations criteria provided in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 205-20-45 are classified as discontinued operations. Assets and liabilities of discontinued operations are presented separately in the Company’s condensed consolidated balance sheets and results of discontinued operations are reported as a separate component of net loss in the Company’s condensed consolidated statements of net loss for all periods presented, resulting in changes to the presentation of certain prior period amounts. Results of discontinued operations are excluded from segment results for all periods presented. Cash flows from discontinued operations are also reported separately in the Company’s condensed consolidated statements of cash flows.

Refer to Note 2 – Discontinued Operations for additional discussion of discontinued operations. All other notes to these condensed consolidated financial statements present the results of continuing operations and exclude amounts related to discontinued operations for all periods presented.

Accounting Policies and Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and during the reporting period. Actual results could materially differ from those estimates. Estimates are used in the following areas, among others: variable consideration associated with revenue recognition, stock-based compensation expense, fair value of long-lived assets for impairment analyses, the valuation allowance included in the deferred income tax calculation, accrued expenses, and fair value of derivative liabilities.

Note 1 to the annual consolidated financial statements contained in the Annual Report on Form 10-K filed with the SEC on March 31, 2025, describes the significant accounting policies and estimates used in preparation of the consolidated financial statements. There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2025, except for those below.

Fair Value Measurement of Derivative Liability

As described in Note 10 – Derivative Liability for Cryptocurrency Private Placement and Note 15 – Subsequent Events, on September 29, 2025, the Company entered into a securities purchase agreement obligating the Company to issue warrants to purchase shares of the Company’s common stock to certain investors in exchange for the purchasers’ contribution to the Company of ATH in a private placement that closed on October 7, 2025. Because the settlement value of the obligation varies, in part, with changes in the price of ATH, the obligation is accounted for as a derivative liability and recorded at fair value as of September 30, 2025. The Company uses a Monte Carlo simulation to determine the fair value of the derivative liability in accordance with ASC 820, Fair Value Measurement. Changes in the fair value of the derivative liability are recorded in earnings and presented within (gain) loss on derivative instruments in the condensed consolidated statements of net loss.

Risks and Uncertainties

Note 1 to the annual consolidated financial statements contained in the Annual Report on Form 10-K filed with the SEC on March 31, 2025, describes certain risks and uncertainties associated with the Company and relevant to the Company’s consolidated financial statements. In connection with the Treasury Strategy adopted in September 2025 and the two private placements completed to support the Treasury Strategy, which were entered into on September 29, 2025 and closed on October 7, 2025, the Company is subject to certain additional risks related to the success of the Company’s digital asset treasury strategy, the volatile and unpredictable changes in the price of ATH, the expected growth of the ATH network, and the availability of opportunities to stake or otherwise generate returns from ATH. Refer to the subheading “Aethir Treasury Strategy” above and Note 15 – Subsequent Events for further discussion.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the FASB. Recently issued ASUs not listed below either were assessed and determined to be not applicable or are currently expected to have no impact on the condensed consolidated financial statements of the Company.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires more detailed income tax disclosures. The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. This ASU is effective for fiscal years beginning after December 15, 2024. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires more detailed disclosures related to certain costs and expenses. The guidance requires entities to disclose amounts of certain expense categories included in expense captions presented on the face of the income statement, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The disclosure requirements may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures.

Recently Adopted Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU updates reportable segment disclosures by expanding the frequency and extent of segment disclosures. This ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The ASU requires the retrospective adoption method. The Company adopted ASU 2023-07 for annual periods beginning in the fiscal year ending December 31, 2024. The Company adopted ASU 2023-07 for interim periods beginning in the interim period ended March 31, 2025. See Note 14 – Segment Information for additional discussion.