NOTE

– STOCKHOLDERS’ EQUITY, STOCK OPTIONS AND WARRANTS

Series D Preferred Shares

April 2019,

the Company issued

3,500,000

shares of Series D preferred stock to Helomics as part of the acquisition. Each share of Series D preferred stock is subject to automatic conversion, whereby each such share converts automatically on a

10:1

basis into a share of the Company’s common stock upon the earlier of (i) the consummation of any fundamental transaction (e.g., a consolidation or merger, the sale or lease of all or substantially all of the assets of Predictive or the purchase, tender or exchange offer of more than

50%

of the outstanding shares of voting stock of Predictive) or (ii) the

one

-year anniversary of the issuance date, which will be

April 4, 2020.

Series E Convertible Preferred Stock

June

through

September 2019,

the Company entered into a private placement securities purchase agreement with investors for shares of Series E convertible preferred stock for an aggregate purchase price of

$1,734,000

and

2,577,000

in the

three

and

nine

-month periods ended

September 30, 2019,

respectively. During the

three

and

nine

-month periods ended

September 30, 2019,

the Company issued

173.4

and

257.7

preferred shares, respectively. The preferred shares include a contingent beneficial conversion amount of

$182,000

and

$289,936

for shares issued during the

three

and

nine

-month periods ended

September 30, 2019,

respectively, representing the intrinsic value of the shares at the time of issuance. The Company determined the Series E convertible preferred stock should be classified as permanent equity and the Company is accreting the beneficial conversion feature amount to the earliest redemption date of

six

months after the initial closing of the Series E convertible preferred stock. This offering is now closed. As of

September 30, 2019,

all shares of the Series E convertible preferred stock issued remain outstanding.

Each Preferred Share Holder shall have the right at the Company’s option to be converted into

0.056857%

of the issued and outstanding shares of common stock immediately prior to conversion for each share of Series E convertible preferred stock beginning

six

months after the initial close date of

June 13, 2019.

On the date that is

months after the initial closing date, the Company has the option to convert the preferred shares into common stock upon the same terms and limitations as the above optional conversion.

Net Loss Attributable to common shareholders

The net loss attributable to common shareholders for the

three

and

nine

months ended

September 30, 2019,

reflects increases for net deemed dividends to Series E convertible preferred shareholders provided in connection with various closings totaling

$2,577,000

of the private placement of Series E convertible preferred stock. The total beneficial conversion feature (BCF) of the Series E convertible preferred stock issued was

$182,000

and

$289,936

for the closing of Series E convertible preferred stock for the

three

and

nine

months ended

September 30, 2019,

respectively.

The Series E convertible preferred stock is

not

currently redeemable because the contingency has

not

been met as of

September 30, 2019,

but it is probable that the preferred stock will be redeemable in the future. The earliest potential redemption based solely on the passage of time is

December 13, 2019

and, therefore, the carrying amount of the Series E convertible preferred stock shall be accreted from the commitment date to the redemption price as a deemed dividend. The accretion of the BCF was

$125,801

and

$146,199

for the

three

and

nine

months ended

September 30, 2019,

respectively. Since the Company does

not

have retained earnings, the amortization of the Series E convertible preferred stock discount was recorded as a deemed dividend through additional paid-in capital and net loss attributable to common shareholders in calculating basic and diluted loss per common share (see Note

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.

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.

For grants of stock options and warrants issued during the quarter ended

September 30, 2019,

the Company used

1.39%

2.03%

risk free interest rate,

dividend rate,

82.4%

volatility and estimated terms of

years. Value computed using these assumptions ranged from

$3.368

$6.527

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, 2017		276,498		$	19.95		195,126		$	237.40

Issued		109,886			10.13		233,615			10.67
Expired		(19,456	)		20.00		(1,071	)		1,995.53
Exercised		-			-		(65,006	)		10.00

Outstanding at December 31, 2018		366,928		$	17.03		362,664		$	41.67

Issued		366,120			7.12		1,805,943			9.36
Expired		(19,484	)		14.73		(630	)		3,258.32
Exercised		-			-		(59,700	)		0.10

Outstanding at September 30, 2019		713,564		$	11.84		2,108,277		$	15.33

Stock-based compensation expense recognized for the

three

and

nine

-month periods ended

September 30, 2019

was

$360,146

and

$2,004,366,

respectively, and for the

three

and

nine

-months periods ended

September 30, 2018

was

$339,954

and

$800,322,

respectively. The Company has

$310,403

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

months.