PolarityTE (PTE) Update

December 30, 2020

PTE Director Minnie Baylor-Henry

(℅ attorney Maggie Dalton)

Dear Ms. Baylor-Henry,

There have been a few big developments at PTE in the past week, so I am
taking some time to document and summarize them. I also offer my opinions,
analysis and speculations on what is going on. The big three developments are:
1. On December, 22 PTE announced that it had raised about $7.2 million by
selling shares, pre-funded warrants, and 62.4 cent common warrants.1
2. On December 23, PTE filed a Form 424B5 (Prospectus Supplement) that
disclosed updated information about its stock structure.2
3. On December 28, Gatemore Capital Management published an open letter to
the PTE Board of Directors.3

New information from these documents includes:

(a) "the product [SkinTE is] three to five years away from full FDA approval"
(b) "Common Stock to be Outstanding after this Offering [the December 22
capital raise is] 54,804,663 shares (assuming no exercise of the pre-funded
warrants, common warrants or placement agent warrants issued in this offering).
Assuming all of the pre-funded warrants were immediately exercised, there would
be 60,042,706 shares of our common stock outstanding after this offering."
Note: Exercise of 10.6 million 62.4 cent warrants from the December 22 capital
raise could push the number of shares outstanding to over 70 million.

Previously available information from the last 10-Q (November 9) included:

(c) "As of November 5, 2020, there were 39,241,323 shares of the Registrant’s
common stock outstanding."

1
https://www.sec.gov/ix?doc=/Archives/edgar/data/1076682/00014931522002408
8/form8-k.htm
2
https://www.sec.gov/Archives/edgar/data/1076682/000149315220024162/form42
4b5.htm
3
https://www.prnewswire.com/news-releases/gatemore-capital-management-llp---
letter-to-the-board-of-directors-of-polarityte-inc-301198622.html

1
(d) "In the coming months we [PTE] will pursue the preparation of an IND filing
with FDA, which we believe we will be able to file in the second half of 2021."
(e) "As of the date of issuance of these unaudited interim condensed financial
statements, the Company expects that its cash and cash equivalents of $23.186
million as of September 30, 2020, will not be sufficient to fund its current business
plan including related operating expenses and capital expenditure requirements
into the second quarter of 2021."

The December 28 Gatemore letter says of PTE's recent actions that, "the
Board acted in bad faith" and that, "the current board and management have little
regard for their fiduciary duty towards shareholders and have even cast doubts over
whether they are fit to act in shareholders' interests." The letter characterized
PTE's actions as, "inept handling of the February 2020 warrants" and "repeated
incoherent and inconsistent steps over the course of a year." Further, the letter
makes it clear that the recent capital raise was contrary to explicit assurances given
to Gatemore by PTE.

Indeed, the highly dilutive $7.2 million December capital raise does appear
to be "incoherent and inconsistent" if PTE really intends to continue as an ongoing
concern. Cash on hand before the raise was not enough to get the company to the
second quarter of 2021. The additional capital won't get PTE to the third quarter of
2021. There will be no money left to file an IND in the second half of 2021, nor
get to an approval for SkinTE in 3-5 years.

The only way I can begin to make sense of PTE is in the context of the
Frost-Honig gang's Nationwide Securities Fraud Enterprise (the "NSFE"). It
appears to me that the main objective of the people involved with PTE is to delay
and minimize their own personal consequences when the Feds finally take
enforcement action related to the 2017-2018 PTE pump-and-dump ("P&D")
securities fraud, for which the Frost-Honig gang created PTE as a corporate
vehicle. While Frost gang members made millions of dollars in illegal profits from
the P&D fraud, PTE itself was left as an unsalvageable wreck. After years of
trying to magically transform a series of lies into a legitimate company, bankruptcy
and further litigation now appear to be both imminent and inevitable for PTE.

Some history is required to understand the Frost-Honig gang NSFE. The

NSFE has so many elements that I cannot even begin to describe them all in this
short letter. However, I will point to a few select reference to provide an outline.

2
 A June 5, 2017 research report by a writer known as "Unemon" listed some
companies that were controlled by the Frost-Honig gang's NSFE.4

Unemon's list includes COCP, which was "Company A" in the SEC
enforcement action against the Frost-Honig gang known as SEC v Honig.5 SEC v
Honig described pump-and-dump ("P&D") securities frauds at three companies.
Besides COCP, the other two companies were MGT Capital and MabVax
Therapeutics, neither of which are listed in Unemon's table.

The SEC has obtained settlements for over $11 million in SEC v Honig, with
further amounts pending. Opko Health, a defendant in SEC v Honig, has agreed to
settle a related class action lawsuit for $16.5 million. Other Frost-Honig gang
litigation is pending. MabVax is in Chapter 11 bankruptcy, with its major asset
appearing to be legal claims against members of the Frost-Honig gang.6

The proceedings in SEC v Honig have provided some insight into the usually
secret investigations of the SEC and DOJ. On August 8, 2019, SEC attorney
Nancy Brown advised the court in SEC v Honig that,

4
http://unemon.com/ResearchEasy/201706_COGT/20170605_COGT_Public.html
5
https://www.sec.gov/litigation/litreleases/2018/lr24262.htm
6
MabVax v Honig et al., San Diego Superior Court.
3
 “We write to advise the Court and the parties that the
Commission’s New York Regional Office continues to investigate
matters that involve conduct of certain Defendants that is distinct
from and post-dates that charged in the Commission’s Amended
Complaint. If the Commission staff representing the Commission in
this matter becomes aware of documents collected in that
investigation that are relevant to matters alleged in the Amended
Complaint, we will produce them to Defendants.” (bold added)

Docket number 127 of SEC v Honig at pages 9-10 discloses “there's a

criminal investigation in San Francisco into the very allegations that has been
ongoing." Docket number 198 of SEC v Honig at page 24 discloses the following
exchange from a November 7, 2019 hearing: “[THE COURT]: Remind me, is
[Honig] under criminal investigation? Has he been indicted? Has he been
convicted? [SEC TRIAL COUNSEL NANCY] BROWN: I've seen no public
record of his criminal status, but he has become a cooperator.”
The SEC's privilege log disclosed in SEC v Honig contains the following
information about the DOJ investigation of the Frost gang.

FBI 302 proffers listed in the SDNY court record of

SEC v Honig as of Sept 6, 2019 (*defendant in SEC v Honig)

Name - number of proffer Date of 302 proffer

*Maza - 1 Apr 5, 2017

*Maza - 2 May 4, 2017
*Ford - 1 Jan 26, 2018
*Ford - 2 March 30, 2018
*Ladd April 30, 2018
*Ford - 3 June 14, 2018
David Hansen - 1 June 22, 2018
David Hansen - 2 July 5, 2018
Jaclin Oct 4, 2018
Epstein - 1 Oct 18, 2018
Zazoff Nov 1, 2018
Aaron Wise Nov 2, 2018
Epstein - 2 December 12, 2018
*John Stetson Feb 14, 2019
*Barry Honig Apr 23, 2019

4
 Various aspects of the frauds at PTE have been described by a number of
sources. Ozgut Ogut was among the first to scientifically debunk PTE's claim that
SkinTE is eligible for FDA registration without controlled clinical trials.7
"Research Noir" reinforced Ogut's position, and also detailed other questionable
aspects of the PTE story.8 Chris Carey (aka "Sharesleuth") documented the stock
transactions of the P&D securities fraud at PTE in detail.9 Carey also detailed the
"stealth" stock promotion network that the Frost-Honig gang NSFE uses to pump
up the price and volume of Frost-Honig gang companies.10 Journalist Teri Buhl
has written extensively about the Frost-Hong gang, including their involvement at
PTE.11 Hindenburg Research (Nate Anderson) published a detailed research report
on the PTE P&D.12 The amended complaint in the PTE class action lawsuit details
several aspects of the P&D.13 Bill Alpert mentioned PolarityTE in his article on
Harvey Kesner - "The Lawyer at the Center of SEC Pump-and-Dump Case."14 As
you well know, I have also written about many aspects of the frauds at PTE.

Carey's reports provide details on profits made by Frost gang members in the
PTE P&D:
-- "Our analysis found that Frost sold more than $6 million in PolarityTE stock last
year [2017]. Those sales were properly disclosed, through an annual update to his
original Form 13G filing."

7
https://www.ozgurogut.com/thoughts/2018/7/19/skinte-and-the-361-pathway
8
https://seekingalpha.com/instablog/49608862-research-noir/5210078-polaritytes-
many-deceptions
9
https://sharesleuth.com/cool-mara-riot-the-big-money-bitcoin-biotech-daisy-
chain/
and
https://sharesleuth.com/cool-mara-riot-part-two-securities-fraud-case-against-
south-florida-group-reverberates-through-additional-companies/
10
https://sharesleuth.com/pretenders-and-ghosts-stealth-promotion-network-
exploits-financial-sites-to-tout-stocks/
11
https://www.teribuhl.com/2020/10/22/barry-honig-allegedly-set-up-undisclosed-
promotion-in-majesco-cool-pte-to-influence-stock-price/
12
https://hindenburgresearch.com/polarityte-investors-beware/
13
http://securities.stanford.edu/filings-
documents/1066/P00_01/201942_r01c_18CV00510.pdf
14
https://www.barrons.com/articles/the-lawyer-at-the-center-of-sec-pump-and-
dump-case-1538675403
5
-- "We determined that Honig and Frost sold $19 million to $23 million of
PolarityTE stock, some in June, July and August [of 2017] as the share price was
taking off, and some in the fall and winter"
-- "Our analysis of SEC filings showed that Honig and Frost sold more than $20
million of their PolarityTE stock between February 2017 and February 2018, with
most of those sales coming in the second half of last year."

The PTE class action amended complaint says"

"169. In an SEC filing on October 2018, Defendant Stetson reported

that he had sold $5.5 million worth of PolarityTE stock. SEC filings
also show that Groussman sold 121,000 shares in the past year. All
told, Stetson Honig, Groussman and Frost appear to have sold over
$30 million in PolarityTE stock over the last year."

Frost gang members and associates are still involved with PTE. PTE's most
recent 10-K says,

"On September 7, 2018, the SEC filed a complaint in the U.S. District
Court for the Southern District of New York (SEC v. Honig et al., No.
1:18-cv-01875 (S.D.N.Y. 2018)) alleging that certain persons,
including John Stetson, our former Chief Financial Officer and Chief
Investment Officer, Barry Honig, who is also a current 5%
shareholder of the Company, and Michael Brauser, who is also a
current 5% shareholder of the Company, manipulated the price of
securities of three public companies (none of which is PolarityTE).
This complaint, which was amended on March 8, 2019 (as amended,
the “Complaint”), alleges that the defendants violated the anti-fraud
and other provisions of the Securities Act, the Exchange Act and SEC
rules promulgated thereunder by writing, or causing to be written,
false or misleading promotional articles, engaging in a variety of other
manipulative trading practices as well as filing false reports of their
beneficial ownership or failure to file reports of their beneficial
ownership when required to do so." (bold added)

The Fintel® website also shows that Brauser and Honig both continued to
hold 5% stakes in PTE (at least until the recent dilution). See the chart on the next
page.

6
 In May of 2020, Frost gang member Michael Brauser unsuccessfully
attempted to have his own designees appointed to the PTE Board of Directors.15

There are many individuals, factions and organizations who have a stake in
or influence on the operations and results of PTE. These include Frost gang
members Phillip Frost, Barry Honig, Michael Brauser, Harvey Kesner and John
Stetson (PTE's former CEO). The stakeholders include large outside investors
such as Gatemore, as well as smaller investors. Influencers include the FDA, the
SEC and the U.S. DOJ. Others in the mix include business writers, journalists,
short sellers, day traders, and pumpers who are not directly affiliated with the Frost
gang. Of course, all PTE insiders including board members and management also
have their own interests and opinions.

My own point of view regarding PTE is mostly influenced by the Frost-

Honig Nationwide Securities Fraud Enterprise ("NSFE") and possible future
enforcement actions that may be taken by the SEC and DOJ against members of
the gang. I begin with the assumption that both the SEC and the DOJ will take
enforcement actions related to PTE, and I believe that the situations of a few key
Frost-Honig gang members who are in the sights of the Feds shed a lot of light on
PTE's future.

John Stetson is the former CFO of PTE. Stetson was a defendant in SEC v
Honig and paid over a million dollars to settle his role in that case.16 Stetson's

15
https://www.sec.gov/Archives/edgar/data/1076682/000165495420005827/brause
rsc13da_may2020.htm
16
https://www.sec.gov/litigation/litreleases/2020/lr24765.htm

7
settlement in that case does not address his role in the PTE P&D securities fraud.
Stetson sold $5.5 million in PTE shares after being fired as CFO. Stetson is
apparently cooperating with the FBI, as evidenced by his 302 proffer.

Barry Honig is the chief strategist of the Frost-Honig gang NSFE. Honig
was a defendant in SEC v Honig and has consented to judgment for liability, but
Honig's monetary penalties have not yet been determined. Honig's settlement in
that case does not address his role in the PTE P&D securities fraud. According to
Chis Carey's research, Honig sold at least around $15 million of PTE stock during
the P&D. Honig is apparently cooperating with the FBI, as evidenced by his 302
proffer and the on-the-record statement of SEC attorney Nancy Brown.

Phillip Frost is the leader of the Frost-Honig gang NSFE. Frost is the
Chairman and CEO of Opko Health. Opko was a defendant in SEC v Honig and
paid $100,000 dollars to settle its role in that case. Opko has agreed to pay a $16.5
million settlement in a class action lawsuit related to its role in various alleged
securities frauds. Frost was a defendant in SEC v Honig and agreed to pay over
$5.5 million dollars to settle his role in that case. Frost's settlement in that case
does not address his role in the PTE P&D securities fraud. According to Chis
Carey's research, Frost sold about $6 million in PTE stock during the PTE P&D.

A remarkable aspect of the PolarityTE pump and dump securities fraud is

the Frost-Honig gang's use of Forbes magazine as part of the pump. The P&D
pump was primed with a January 3, 2017 Forbes article by Matt Schiffrin entitled,
"Meet Miami's Renaissance Billionaire."17 The article is a fawning piece that
extols Frost's virtues as a "scholar, inventor and fervent patron of the arts and
sciences." This first Forbes article does not mention PolarityTE.

The Forbes PTE pump article is dated August 8, 2017 and is entitled,
"PolarityTE: Will This Biotech Be the Next Amazon Or Tesla?"18 The article was
written by Jeff Dyer, who was and still is on the PTE Board of Directors. In
describing the "advantages" of taking PolarityTE public with a reverse merger, this
second Forbes article says,

17
https://www.forbes.com/sites/schifrin/2017/01/03/meet-miamis-renaissance-
billionaire/?sh=32e159be7306
18
https://www.forbes.com/sites/innovatorsdna/2017/08/08/polarityte-will-this-
biotech-be-the-next-amazon-or-tesla/?sh=58def969363a
8
 "Since 2014 Frost, along with co-investor Barry Honig, have
used the reverse merger process multiple times with life science
companies including SciVac now VBI Vaccines, Inc.
(NASDAQ:VBIV) and CoCrystal Pharma Inc. (OTCBB:COCP)."

Of course, CoCrystal (formerly BioZone) was used a vehicle for a P&D

securities fraud. The two other Frost-Honig gang P&D frauds described in SEC v
Honig (MGT Capital and MabVax) were also the result of reverse mergers. In at
least four cases (BioZone, MGT, MabVax and PTE), the Frost-Honig gang has
used the reverse merger process as a method to acquire and register cheap shares of
companies that could later be dumped into the market once the pump started.

This second Forbes article is all about pumping up the price and volume of
PTE. Not only did this increase illegal profits as Frost gang insiders dumped
shares, it helped PTE to raise capital from the sales of new shares:

"On April 12, 2018, the Company completed a public offering

of 2,335,937 shares of the Company’s common stock, par value
$0.001 per share, at an offering price of $16.00 per share resulting in
net proceeds of approximately $34.6 million, after deducting offering
expenses payable by the Company and on June 7, 2018, the Company
completed an underwritten offering of 2,455,882 shares of the
Company’s common stock, par value $0.001 per share, at an offering
price of $23.65 per share resulting in net proceeds of approximately
$58.0 million, after deducting offering expenses payable by the
Company (see Note 11)."19
PTE's share price has collapsed since then, as is typical with a Frost-Honig
gang pump-and-dump securities fraud. (See the chart on the next page.)

19
https://www.sec.gov/Archives/edgar/data/1076682/000149315219003515/form1
0-kt.htm#a_022
PTE Form 10-KT, March 18, 2019, page F-15
9
 Everything that plays out at PTE is with the backdrop of the P&D securities
fraud where rich and influential Frost gang members were instigators and
participants. Everyone else, including you Ms. Baylor-Henry, has their own role to
play. However, the reality is that the entire situation is dysfunctional, and trying to
pretend that PTE can now operate as a normal business is a complete fantasy.

Events of the last two years after the P&D prove this. You have had to deal
with the ouster of Denver Lough from his positions as CEO and Chairman of PTE.
You still have to deal with board members and management who may face
potential liabilities related to the P&D. Insiders have been selling shares, including
sales by Hoyler and Hague within the last week. I wrote to you last year about an
apparent "mini pump and dump" at PTE.20 You have seen the fake story of the
P&D evaporate, even as PTE spent tens of millions of dollars in a futile effort to
try to prop up that fake story. You have participated in various capital raises for
the company where investor disclosures may not have been adequate. You have
been surrounded by the influence of people who have been trying to protect and
advance their own interests at the expense of their fiduciary duties.

20
https://www.scribd.com/document/427438627/September-23-2019-mini-pump-
and-dump-at-PTE
10
 Last week PTE raised about $7.2 million in a capital raise. Mr. Liad Meidar
of Gatemore rightfully objected to this capital raise, though he has a different
perspective and a different set of information than I do. I offer my own opinions
and speculations based on my own perspective and knowledge set.

I suspect that the December 22 capital raise was done with PTE's full
knowledge that the situation at PTE is hopeless. I think that PTE's primary goal is
to delay an inevitable bankruptcy, because bankruptcy may result in an entire new
set of fraud charges. I suspect that the investor may be complicit in the scheme
and may be operating with the promise of short-term gains by quickly flipping its
new shares, pre-funded warrants, and 62.4 cent warrants.

Factors that support my suspicions include:

-- PTE has a history of fraud.
-- A flurry of activity on twitter and the stock twits message board accompanied
the capital raise. This temporarily has raised the share price above the exercise
price of the 62.4 cent warrants, and also has resulted in higher trading volumes.
The higher trading volumes make it easier for the new investor to flips its shares.
-- The capital raise was structured with pre-funded warrants and a 4.99% blocker
provision to potentially prevent the identity of the investor from becoming publicly
known.
-- PTE management would be glad to see the 10.6 million new 62.4 cent warrants
quickly converted to shares for another $6.6 million.
-- The Gatemore letter reveals that PTE misrepresented its intentions regarding
financing to Gatemore.

The Gatemore letter may have put somewhat of a damper on any capital
raise/share-flipping scheme. Time will tell how this little drama plays out, but the
big picture is still the same regardless of whether my suspicions are correct or not.
PTE is almost certainly headed for bankruptcy.

Lee Pederson

Cc: SEC OIG

Posted on scribd.com with a link from Twitter
Bcc: SEC and DOJ (FBI and US Attorney’s Office)
Journalists and business writers
Other interested parties
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