NOTE

– STOCKHOLDERS’ EQUITY, STOCK OPTIONS AND WARRANTS

2015

Public Offering of Units

August 31, 2015 (

the “Issuance Date”), the Company completed a public offering (the “Offering”) of

1,666,667

Units (the “Units”) as described below. The public offering price in the Offering was

$9.00

per Unit, and the purchase price for the underwriter of the Offering (the “Underwriter”) was

$8.28

per Unit, resulting in an underwriting discount and commission of

$0.72

(or

8.00%

) per Unit and total net proceeds to the Company before expenses of

$13.8

million. The Company had granted the Underwriter an option for a period of

days to purchase up to an additional

250,000

Units solely to cover over-allotments. The Underwriter chose

not

to purchase any additional Units under the over-allotment option. The Company paid to the Underwriter a non-accountable expense allowance equal to

of the gross proceeds of the Offering and agreed to reimburse expenses incurred by the Underwriter up to

$70,000.

August 31, 2015,

because of the consummation of the Offering and the issuance of the

228,343

Exchange Units in the Unit Exchange described below, the Company issued a total of

1,895,010

Units, comprised of a total of aggregate of

75,801

shares of common stock,

1,895,010

shares of Series B Preferred Stock and

7,580,040

Series A Warrants.

Each Unit consisted of

one

share of common stock, par value

$0.01

per share (the “Common Stock”),

one

share of Series B Convertible Preferred Stock (“Series B Preferred Stock”) and

four

Series A Warrants. The shares of common stock, the shares of Series B Preferred Stock and the Series A Warrants that comprise the Units automatically separated on

February

29,

2016.

For a description of the terms of the Series B Convertible Preferred Stock included within the Units, see “Series B Preferred Stock” below. For a description of the terms of the Series A Warrants included within the Units, see “Series A Warrants” below.

Series A Warrants

. The Series A Warrants separated from the Series B Convertible Preferred Stock and the Common Stock included within the Units as described above and are currently exercisable. The Series A Warrants terminate on

August 31, 2020.

Each Series A Warrant is exercisable into

one

share of common stock at an initial cash exercise price of

$123.75

per share. The cash exercise price and number of shares of common stock issuable upon cash exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the common stock and the exercise price.

Holders

may

exercise Series A Warrants by paying the exercise price in cash or, in lieu of payment of the exercise price in cash, by electing to receive a number of shares of Common Stock equal to the Black-Scholes Value based upon the number of shares the holder elects to exercise. The number of shares of Common Stock to be delivered will be determined according to the following formula, referred to as the “Cashless Exercise.”

Total Shares = (A

B) / C

Where:

	·	Total Shares is the number of shares of Common Stock to be issued upon a Cashless Exercise.

	·	A is the total number of shares with respect to which the Series A Warrant is then being exercised.

B is the Black-Scholes Value.

C is the closing bid price of the Common Stock as of

two

trading days prior to the time of such exercise, provided that in

event

may

“C” be less than

$0.43

per share (subject to appropriate adjustment in the event of stock dividends, stock splits or similar events affecting the Common Stock).

The Black-Scholes Value as of

September 30, 2016

was

$4.319,

and the closing bid price of Common Stock as of

September 30, 2016,

was

$4.125.

Therefore, an exercise on that date would have resulted in the issuance of

shares of Common Stock for each Series A Warrant. Approximately

6,141,115

Series A Warrants have been exercised in cashless exercises as of

September 30, 2016,

resulting in the issuance of

2,318,663

shares of Common Stock. If all of the remaining

35,084

Series A Warrants that were issued as part of the Units sold in the Offering and part of the Units issued on

August 31, 2015

were exercised pursuant to a cashless exercise and the closing bid price of the Company’s common stock as of the

two

trading days prior to the time of such exercise was

$0.43

per share or less and the Black-Scholes Value were

$4.319

(the Black-Scholes Value as of

September 30, 2016),

then a total of an additional approximately

564

shares of the Company’s common stock would be issued to the holders of such Series A Warrants.

The Series A Warrants will

not

be exercisable or exchangeable by the holder of such warrants to the extent (and only to the extent) that the holder or any of its affiliates would beneficially own in excess of

4.99%

of the common stock of the Company, determined in accordance with Section

(d) of the Securities Exchange Act of

1934,

as amended, and the regulations promulgated thereunder.

In addition to (but

not

duplicative of) the adjustments to the exercise price and the number of shares of common stock issuable upon exercise of the Series A Warrants in the event of stock dividends, stock splits, reorganizations or similar events, the Series A Warrants provide for certain adjustments if the Company, at any time prior to the

three

year anniversary of the Issuance Date, (

) declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to all or substantially all of the holders of shares of Common Stock at any time after the Issuance Date, or (

) grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all of the record holders of any class of shares of Common Stock. Further, if at any time a Series A Warrant is outstanding, the Company consummates any fundamental transaction, as described in the Series A Warrants and generally including any consolidation or merger into another corporation, or the sale of all or substantially all of the Company’s assets, or other transaction in which the Common Stock is converted into or exchanged for other securities or other consideration, the holder of any Series A Warrants will thereafter receive, the securities or other consideration to which a holder or the number of shares of Common Stock then deliverable upon the exercise or exchange of such Series A Warrants would have been entitled upon such consolidation or merger or other transaction.

Unit Purchase Option.

The Company, in connection with the Offering, entered into a Unit Purchase Option Agreement, dated as of

August 31, 2015 (

the “Unit Purchase Option”), pursuant to which the Company granted the Underwriter the right to purchase from the Company up to a number of Units equal to

of the Units sold in the Offering (or up to

83,333

Units) or the component securities of such Units at an exercise price equal to

125%

of the public offering price of the Units in the Offering, or

$11.25

per Unit.

Series B Preferred Stock.

Each share of Series B Preferred Stock became convertible into

one

share of Common Stock (subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events) on the

six

-month anniversary of the Issuance Date or on the date of an Early Separation. In addition, the Series B Preferred Stock will automatically convert into shares of common stock upon the occurrence of a fundamental transaction, as described in the certificate of designations for the Series B Preferred Stock but including mergers, sales of the company’s assets, changes in control and similar transactions. The Series B Preferred Stock is

not

convertible by the holder of such preferred stock to the extent (and only to the extent that the holder or any of its affiliates would beneficially own in excess of

4.99%

of the common stock of the Company. The Series B Preferred Stock has

voting rights, except for the right to approve certain amendments to the certificate of designations or similar actions. With respect to payment of dividends and distribution of assets upon liquidation or dissolution or winding up of the Company, the Series B Preferred Stock shall rank equal to the common stock of the Company.

sinking fund has been established for the retirement or redemption of the Series B Preferred Stock.

Unit Exchange.

February 4, 2014,

the Company raised

$2,055,000

in gross proceeds from a private placement of

20,550

shares of Series A Convertible Preferred Stock, par value

$0.01,

with a stated value of

$100

per share (the “Series A Preferred Shares”) and warrants to purchase shares of the Company’s common stock. The Series A Preferred Shares and warrants were sold to investors pursuant to a Securities Purchase Agreement, dated as of

February 4, 2014.

August 31, 2015,

the Company issued a total of

228,343

Units (the “Exchange Units”) in exchange for the outstanding Series A Preferred Stock which were then cancelled pursuant to an agreement with the holders of the Series A Preferred Shares. The warrants that were issued in connection with the issuance of the Series A Preferred Shares remained outstanding; however, the warrant amounts were reduced so that the warrants are exercisable into an aggregate of

3,991

shares of the Company’s common stock. The Exchange Units were exempt from registration under Section

(a)(

) of the Securities Act. On

August 31, 2015,

the Company filed a termination certificate with the Delaware Secretary of State. Following that date there were

shares of Series A Preferred Stock outstanding, and the previously authorized shares of Series A Preferred Stock resumed the status of authorized but unissued and undesignated shares of preferred stock of the Company.

Redemption of Convertible Notes.

In connection with the closing of the Offering,

$933,074

aggregate principal amount of Convertible Notes plus interest and a

40%

redeemable premium were redeemed for total payments of

$1,548,792.

See Note

Of this amount, approximately

$167,031

was paid to its affiliates in redemption of their Convertible Notes.

Registered Exchange Offer for Warrants.

March 25, 2016,

the Company commenced a registered exchange offer (the “Exchange Offer”) to exchange Series B Warrants (the “Series B Warrants”) to purchase shares of the Company’s common stock, par value

$0.01

per share (the “Warrant Shares”), for up to an aggregate of

3,157,186

outstanding Series A Warrants (the “Series A Warrants”). On

March 31, 2016,

each Series A Warrant could be exercised on a cashless basis for

10.05

shares of common stock. Each Series B Warrant

may

be exercised on a cashless basis for

one

share of common stock. For each outstanding Series A Warrant tendered by holders, the Company offered to issue

10.2

Series B Warrants, which are subject to cashless exercise at a fixed rate of

one

share of common stock per Series B Warrant (subject to further adjustment for stock splits, etc.). The Exchange Offer expired at midnight, Eastern time, on

April 21, 2016.

1,770,556

Series A Warrants were tendered by holders. The Company delivered an aggregate of

18,059,671

Series B Warrants pursuant to the terms of the Exchange Offer. In addition, between

March 31, 2016

and

July 6, 2016

1,251,510

Series A Warrants were exercised in cashless exercises, resulting in the issuance of

20,122

shares of common stock.

2016

Registered Direct Offering

November 29, 2016,

the Company closed a registered direct offering for gross proceeds of

$1,983,337.

The offering consisted of

756,999

shares of common stock priced at

$2.62

per share and

five

-year warrants for

756,999

shares of common stock that become exercisable in

six

months, with a strike price of

$4.46

per share. The net proceeds from the sale of securities, after deducting placement agent fees and related offering expenses, was

$1,739,770.

2017

Private Placement

November 30, 2017,

the Company closed a private placement of a newly created series of preferred stock designated as “Series C Convertible Preferred Stock” with a New York based Family Office. Pursuant to the Securities Purchase Agreement, the investor purchased

1,213,819

shares of Series C stock at a purchase price of

$1.071

per Series C Share, together with a warrant to purchase up to

606,910

shares of common stock. The warrant has an exercise price of

$1.26

per share, subject to adjustment, has a

five

and

one

-half year term and is exercisable commencing

six

months following the date of issuance. Total gross proceeds to the Company were

$1,300,000

before deducting expenses and will be used for general working capital. In connection with the Offering and pursuant to a registration rights agreement, the Company has agreed to file a “resale” registration statement covering all of the shares of common stock issuable upon conversion of the warrant. Pursuant to the Securities Purchase agreement, and as of this filing date, all the Preferred Series C shares were converted at a conversion rate of

1.167

to a maximum of

1,250,269

shares of common stock. The remaining

142,466

shares of Preferred Series C stock were cancelled with a redemption payment to the holder for

$189,285.

2018

Firm Commitment Public Offering

January 2018,

the Company completed a firm commitment underwritten public offering of

2,900,000

Units at an offering price of

$0.95

per Unit, with each Unit consisting of

one

share of the Company’s common stock and

0.3

of a Series E Warrant, with each whole Series E Warrant purchasing

one

share of common stock at an exercise price of

$1.00

per whole share. The shares of Common Stock and Series E Warrants were immediately separable and were issued separately. Gross proceeds were approximately

$2,755,000,

before deducting expenses. The Company granted the underwriter a

-day option to purchase an additional (i) up to

290,000

additional shares of Common Stock at the public offering price per Unit less the price of the Series E Warrant included in the Units and less the underwriting discount and/or (ii) additional Series E Warrants to purchase up to

87,000

additional shares of common stock at a purchase price of

$0.001

per Series E Warrant to cover over-allotments, if any. On

February 21, 2018,

the underwriter exercised on

215,247

shares of common stock, par value

$0.01,

$0.9497

per share as described in the Underwriting Agreement. The Company received net proceeds of

$188,066

after deductions of

$16,354

representing the Underwriter’s discount of

of the purchase price of the shares.

Share Exchange Agreement With Helomics

January 11, 2018,

the Company entered into a share exchange agreement with Helomics Holding Corporation. Pursuant to the share exchange agreement Helomics issued

2,500,000

shares of its Series A Preferred Stock in exchange for

1,100,000

shares of common stock. Under the share exchange agreement, in

March 2018

the Company converted

$500,000

in secured notes into another

of Helomics’ outstanding shares, which results in the Company owning

25%

of Helomics outstanding stock. The secured notes are related to the Company’s previous loans of

$500,000

to Helomics. The

1,100,000

shares are being held in escrow by Corporate Stock Transfer, Inc. as escrow agent. While the Precision Therapeutic shares are held in escrow, they will be voted as directed by the Company’s board of directors and management. The Precision Therapeutic shares will be released to Helomics following a determination that Helomics’ revenues in any

-month period have been equal or greater than

$8,000,000.

The Helomics Preferred Stock issued to the Company is convertible into an aggregate of

20%

of the outstanding capital stock of Helomics. In addition, the terms of the Helomics Preferred Stock include certain protective provisions that require consent of the Company before Helomics

may

take certain actions, including issuing preferred stock senior to the Helomics Preferred Stock or entering into fundamental corporate transactions. The Company also has certain anti-dilution protections and the right to receive dividends.

Increases in Authorized Shares

At a special meeting of the stockholders on

January 29, 2017,

the stockholders approved a proposal to increase the number of authorized shares of common stock from

8,000,000

shares to

24,000,000

shares of common stock under the Company’s certificate of incorporation.

At the annual meeting on

December 28, 2017,

the stockholders approved a proposal to increase the number of authorized shares of common stock from

24,000,000

50,000,000

shares of common stock,

$0.01

par value. The amendment to the certificate of incorporation to affect this increase was filed on

January 2, 2018.

Equity Incentive Plan

The Company has an equity incentive plan, which allows issuance of incentive and non-qualified stock options to employees, directors and consultants of the Company, where permitted under the plan. The exercise price for each stock option is determined by the Board of Directors. Vesting requirements are determined by the Board of Directors when granted and currently range from immediate to

three

years. Options under this plan have terms ranging from

three

ten

years.

Accounting for share-based payment

The Company uses the Black-Scholes option valuation model which requires the input of significant assumptions including an estimate of the average period of time employees will retain vested stock options before exercising them, the estimated volatility of the Company's common stock price over the expected term, the expected dividend rate, the risk-free interest rate, and forfeiture taken at occurrence. Changes in the assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related expense recognized. The assumptions the Company uses in calculating the fair value of stock-based payment awards represent the Company's best estimates, which involve inherent uncertainties and the application of management's judgment. As a result, if factors change and the Company uses different assumptions, the Company's equity-based compensation expense could be materially different in the future.

Since the Company's common stock has

significant public trading history, and the Company has experienced

significant option exercises in its history, the Company is required to take an alternative approach to estimating future volatility and estimated life and the future results could vary significantly from the Company's estimates. The Company compiled historical volatilities over a period of

years of

small-cap medical companies traded on major exchanges and

mid-range medical companies on the OTC Bulletin Board and combined the results using a weighted average approach. In the case of ordinary options to employees the Company determined the expected life to be the midpoint between the vesting term and the legal term. In the case of options or warrants granted to non-employees, the Company estimated the life to be the legal term unless there was a compelling reason to make it shorter.

When an option or warrant is granted in place of cash compensation for services, the Company deems the value of the service rendered to be the value of the option or warrant. In most cases, however, an option or warrant is granted in addition to other forms of compensation and its separate value is difficult to determine without utilizing an option pricing model. For that reason the Company also uses the Black-Scholes option-pricing model to value options and warrants granted to non-employees, which requires the input of significant assumptions including an estimate of the average period the investors or consultants will retain vested stock options and warrants before exercising them, the estimated volatility of the Company's common stock price over the expected term, the number of options and warrants that will ultimately be forfeited before completing vesting requirements, the expected dividend rate and the risk-free interest rate. Changes in the assumptions can materially affect the estimate of fair value of stock-based consulting and/or compensation and, consequently, the related expense recognized.

Since the Company has limited trading history in its stock and

first

-hand experience with how its investors and consultants have acted in similar circumstances, the assumptions the Company uses in calculating the fair value of stock-based payment awards represent its best estimates, which involve inherent uncertainties and the application of management's judgment. As a result, if factors change and the Company uses different assumptions, the Company's equity-based consulting and interest expense could be materially different in the future.

Valuation and accounting for options and warrants

The Company determines the grant date fair value of options and warrants using a Black-Scholes option valuation model based upon assumptions regarding risk-free interest rate, expected dividend rate, volatility and estimated term.

January 15, 2018,

the Company issued inducement stock options in accordance with NASDAQ listing rule for

50,000

shares of common stock, par value

$0.01

$0.97

per share to the Company’s newly hired International Vice President of Sales. The options will vest in

four

equal increments: on the first, second,

third

and

fourth

quarters of the hiring date anniversary.

March 12, 2018,

the Company issued inducement stock options in accordance with NASDAQ rule for

111,112

shares of common stock, par value

$0.01

$1.35

per share to the Company’s newly hired Vice President of Sales and Marketing. The options will vest in

four

equal increments: on the first, second,

third

and

fourth

quarters of the hiring date anniversary.

For grants of stock option and warrants in

2018

the Company used

2.33%

2.87%

risk free interest rate,

dividend rate,

59%

66%

volatility and estimated terms of

years. Value computed using these assumptions ranged from

$0.4816

$1.0044

per share.

The following summarizes transactions for stock options and warrants for the periods indicated:

	Stock Options					Warrants
	Number of Shares			Average Exercise Price		Number of Shares			Average Exercise Price
Outstanding at December 31, 2016		165,643		$	11.22		871,101		$	52.22

Issued		2,612,070			1.45		1,082,946			1.49
Expired		(12,730	)		10.39		(2,790	)		281.46
Exercised		-			-		-			-

Outstanding at December 31, 2017		2,764,983		$	2.00		1,951,257		$	23.74

Issued		325,595			1.11		957,000			1.00
Expired		-			-		(9,580	)		180.12
Exercised		-			-		(38,625	)		1.00

Outstanding at March 31, 2018		3,090,578		$	1.89		2,860,052		$	5.61

March 31, 2018,

1,957,291

stock options are fully vested and currently exercisable with a weighted average exercise price of

$2.18

and a weighted average remaining term of

9.23

years. There are

2,860,052

warrants that are fully vested and exercisable. Stock-based compensation recognized for the

three

months ended

March 2018

and

March 2017

was

$226,387

and

$99,307,

respectively. The Company has

$1,180,348

of unrecognized compensation expense related to non-vested stock options that are expected to be recognized over the next

months.

The following summarizes the status of options and warrants outstanding at

March 31, 2018:

Range of Prices		Shares		Weighted Remaining Life
Options
$	0.97		191,753		9.77
$	1.01		124,358		9.76
$	1.10		22,730		10.00
$	1.35		111,112		9.96
$	1.454		17,200		9.51
$	1.47		2,456,226		9.24
$	2.10		14,286		9.01
$	2.25		293		8.41
$	2.42		24,768		8.39
$	2.80		57,145		8.76
$	3.75		44,000		8.26
$	4.125		3,636		8.51
$	4.1975		7,147		8.47
$	4.25		3,529		8.01
$	5.125		3,902		8.44
$	65.75		190		7.56
$	73.50		1,157		7.76
$	77.50		2,323		7.25
$	80.25		187		7.51
$	86.25		232		7.01
$	131.25		81		4.44
$	148.125		928		4.97
$	150.00		1,760		4.38
$	162.50		123		6.76
$	206.25		121		6.51
$	248.4375		121		5.29
$	262.50		130		5.29
$	281.25		529		4.80
$	318.75		3		5.11
$	346.875		72		6.01
$	431.25		306		5.94
$	506.25		188		5.76
$	596.25		42		5.50

			3,090,578

Warrants
$	1.00		1,675,374		4.39
$	1.07		697,946		4.60
$	2.25		385,000		3.82
$	123.75		94,084		2.42
$	243.75		2,529		1.35
$	309.375		2,850		1.36
$	309.50		222		1.61
$	337.50		178		0.22
$	371.25		946		0.16
$	506.25		59		0.88
$	609.375		862		0.85
			2,860,052

At the annual meeting on

December 28, 2017,

the stockholders approved an amendment to the Company’s

2012

Plan to (i) increase the reserve of shares of Common Stock authorized for issuance thereunder to

5,000,000,

(ii) increase certain threshold limits for grants, and (iii) to re-approve the performance goals thereunder. As described in the Company’s definitive proxy statement filed with the SEC on

December 4, 2017,

amendments to the

2012

Plan were considered at the

2016

annual meeting on

July 28, 2016

but were

not

approved by the required vote. For options to purchase approximately

2.5

million shares granted after the

2016

annual meeting, the grantees agreed

not

to exercise the options prior to further stockholder approval of an increase in the reserve under the

2012

Plan. As a result of the stockholder approval of the amendments at the

2017

annual meeting, these restrictions on exercise were removed on

December 28, 2017.

Due to the removal of this restriction on exercise, the Company recognized a non-cash charge for compensation expense of approximately

$1.9

million in the

fourth

quarter of

2017.

Stock Options and Warrants Granted by the Company

The following table is the listing of stock options and warrants as of

March 31, 2018

by year of grant:

Stock Options:
Year	Shares		Price
2011		173		$281.25
2012		1,841	131.25	–	150.00
2013		1,553	148.125	–	596.25
2014		836	162.50	–	431.25
2015		4,088	65.75	–	86.25
2016		144,422	2.25	–	5.13
2017		2,612,070	1.01	–	2.10
2018		325,595	0.97	–	1.35
Total		3,090,578	$0.97	–	596.25

Warrants:
Year	Shares		Price
2013		1,126	337.50	–	371.25
2014		6,455	243.75	–	609.38
2015		94,151	0.00	–	243.75
2016		756,999		4.46
2017		1,082,946	1.07	–	2.25
2018		918,375		1.00
Total		2,860,052	$0.00	–	609.38