NOTE

– STOCKHOLDERS’ EQUITY, STOCK OPTIONS AND WARRANTS

Authorized Shares

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.

March 22, 2019,

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

50,000,000

100,000,000

shares of common stock,

$0.01

par value.

2018

Firm Commitment Public Offering

January 2018,

the Company completed a firm commitment underwritten public offering of

290,000

units at an offering price of

$9.50

per unit, with each unit consisting of

one

share of the Company’s common stock and

0.3

of a warrant, with each whole warrant purchasing

one

share of common stock at an exercise price of

$1.00

per whole share. The shares of common stock and warrants were immediately separable and were issued separately. Gross proceeds were

$2,755,087,

before deducting expenses. On

February 21, 2018,

the underwriter exercised on

21,525

shares of common stock, par value

$0.01,

$9.50

per share as described in the underwriting agreement. The Company received net proceeds of

$188,066

after underwriting expenses of

$16,354

related to this exercise.

Share Exchange Agreement with Helomics

January 11, 2018,

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

2,500,000

shares of its series A preferred stock in exchange for

110,000

shares of common stock. The Helomics preferred stock issued to the Company was convertible into an aggregate of

20%

of the outstanding capital stock of Helomics. In

March 2018,

the Company converted

$500,000

in secured notes into another

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

25%

of Helomics outstanding stock.

Share Issuance for Consulting

July 10

and

11,

2018,

the Company issued

25,000

shares of common stock, par value

$0.01,

$11.80

per share for consulting fees pursuant to the TumorGenesis license fees contract, and

75,000

shares of common stock, par value

$0.01,

$11.70

per share, in escrow, for TumorGenesis license fees pursuant to the TumorGenesis license fees contract.

2019

Registered Sales of Common Stock and Warrants

February 27, 2019,

the Company entered into a placement agency agreement for a registered direct offering in which the Company sold

138,500

shares of common stock and warrants to purchase up to

69,250

shares of common stock. The common stock and warrants were sold in units, with each unit consisting of

0.1

share of common stock and a warrant to purchase

0.05

of a share of the Company’s common stock at an exercise price of

$10.00

per whole share. The Warrants are exercisable at any time on or after the date of issuance and expire on the

fifth

anniversary of issuance. The units were sold at a price of

$9.00

per unit, resulting in gross proceeds of

$1,246,608

and net offering proceeds, after deducting the placement agent’s fees and other estimated offering expenses of

$1,111,888.

The closing of this offering occurred on

March 1, 2019.

The Company granted the placement agents or its assigns the right to purchase up to an aggregate of

6,925

units at an exercise price of

$11.25

per unit. The unit purchase options shall expire on

February 27, 2024.

March 26, 2019,

the Company entered into a placement agency agreement for a registered direct offering in which the Company sold

147,875

shares of common stock and warrants to purchase up to

73,938

shares of common stock. The common stock and warrants were sold in units, with each unit consisting of

0.1

share of common stock and a warrant to purchase

0.05

of a share of the Company’s common stock at an exercise price of

$10.00

per whole share. The warrants are exercisable at any time on or after the date of issuance and expire on the

fifth

anniversary of issuance. The units were sold at a price of

$8.00

per unit, resulting in gross proceeds of

$1,183,101

and net offering proceeds, after deducting the placement agent’s fees and other estimated offering expenses of

$1,053,460.

The closing of this offering occurred on

March 29, 2019.

The Company granted the placement agents or its assigns the right to purchase up to an aggregate of

73,937

units at an exercise price of

$1.00

per unit. The unit purchase options shall expire on

March 29, 2024.

October 1, 2019,

the Company entered into a placement agency agreement for a public offering in which the Company sold

633,554

shares of the Company’s common stock. The common stock was sold at a price of

$5.00

per share, resulting in gross proceeds to the Company of

$3,167,769

and net offering proceeds, after deducting the placement agents’ fees and other estimated offering expenses of

$2,811,309.

The closing of the offering occurred on

October 4, 2019.

In addition, the Company granted warrants to the placement agents to purchase up to

63,355

shares of common stock. The warrants have an exercise price of

$6.25

and include a cashless exercise.

Series E Convertible Preferred Stock

June 2019,

the Company entered into a private placement securities purchase agreement with investors for shares of Series E convertible preferred stock. The Company issued

258

preferred shares. Each preferred share holder shall have the right to convert each Series E convertible preferred share into

0.056857%

of the issued and outstanding shares of common stock immediately prior to conversion for each share of Series E convertible 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. The preferred shares include a contingent beneficial conversion amount of

$289,936,

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 beneficial conversion feature amount is being accreted to the earliest redemption date of

six

months after the initial closing of the Series E convertible preferred stock. This offering was closed in

September 2019.

Equity Line

October 24, 2019,

the Company entered into an equity purchase agreement with an investor, providing for an equity financing facility. Upon the terms and subject to the conditions in the purchase agreement, the investor is committed to purchase shares having an aggregate value of up to

$15,000,000

of the Company’s common stock for a period of up to

three

years. The Company issued to the investor

104,651

commitment shares at a fair market value of

$450,000

for entering into the agreement. From time to time during the

three

-year commitment period, provided that the closing conditions are satisfied, the Company

may

provide the investor with put notices to purchase a specified number of shares subject to certain limitations and conditions and at specified prices, which generally represent discounts to the market price of the common stock. During

2019,

the Company issued

122,356

shares of common stock valued at

$319,196

pursuant to the equity line. As of

December 31, 2019,

there was

$14,680,805

remaining available balance under the equity line.

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 market price on the date of issuance. Vesting requirements are determined by the Board of Directors when granted and currently range from immediate to

three

years. Options outstanding under this plan have a contractual life of

ten

years.

Valuation and Accounting for Options and Warrants

ASC

718

–

Compensation – Stock Compensation, (“ASC

718”

)

requires that a company that issues equity as compensation needs to record compensation expense on its statements of net loss that corresponds to the estimated cost of those equity grants. ASC

718

requires companies to estimate the fair value of stock-based payment awards on the date of grant using an option-pricing model or other acceptable means. 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 number of options 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 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.

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. Beginning in

2019,

the Company began calculating the estimated volatility used in the Black-Scholes option valuation model based on the trading history of the Company’s own stock. Given the limited trading history of the Company’s common stock, the Company had previously used the volatility of comparable companies in order to value options and warrants granted in years prior to

2019.

The fair value of each option grant is estimated on the grant date using the Black-Scholes option valuation model with the following assumptions:

	Year Ended December 31,
	2019			2018
	Stock Options
Expected dividend yield		0.0%			0.0 %
Expected stock price volatility	78.6%	-	82.4%		66.0 %
Risk-free interest rate	1.50%	-	2.76%	2.46%	-	3.07%
Expected life of options (in years)		10			10

	Warrants
Expected dividend yield		0.0 %			0.0 %
Expected stock price volatility	78.6%	-	82.4%		59.0 %
Risk-free interest rate	1.39%	-	2.58%	2.33%	-	2.96%
Expected life of options (in years)		5			5

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
Forfeited		(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		423,295			6.53		1,869,299			9.25
Forfeited		(23,799	)		13.30		(653	)		3,249.28
Exercised		-			-		(59,700	)		0.10

Outstanding at December 31, 2019		766,424		$	11.34		2,171,610		$	15.26

December 31, 2019,

669,050

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

$11.93

and a weighted average remaining term of

8.38

years. There are

2,171,610

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

2019

and

2018

was

$2,250,422

and

$1,124,928,

respectively. The Company has

$201,628

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

December 31, 2019:

Range of Exercise Prices	Shares		Weighted Average Remaining Life
Options:
$2.61 – 6.50		157,848		9.53
$7.324 – 8.491		285,826		9.07
$9.00 – 14.70		310,882		7.50
$21.00 – 51.25		11,045		6.90
$657.50 – 5,962.50		823		4.39
Total		766,424

Warrants:
$0.10 – 8.36		250,145		4.56
$10.00		1,674,088		4.22
$10.71 – 22.50		237,970		3.23
$1,237.50		9,407		0.67
Total		2,171,610

Stock options and warrants expire on various dates from

January 2020

December 2029.

Stock Options and Warrants Granted by the Company

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

December 31, 2019

by year of grant:

Stock Options:

Year	Shares		Price
2011		17			$ 2,812.50
2012		171		1,312.50	–	1,500.00
2013		150		1,481.25	–	5,962.50
2014		84		1,625.00	–	4,312.50
2015		401		657.50	–	862.50
2016		9,617		22.50	–	51.25
2017		235,053		10.10	–	21.00
2018		97,636		6.19	–	13.50
2019		423,295		2.61	–	9.00
Total		766,424		$0.45	–	5962.50

Warrants:

Year	Shares		Price
2015		9,407			$ 1,237.50
2016		25,233			10.00
2017		108,295		10.71	–	22.50
2018		219,076		8.36	–	13.125
2019		1,809,599		2.50	–	11.88
Total		2,171,610		$2.50	–	3,095.00