PolarityTE (PTE) Update

October 29, 2020

PTE Director Minnie Baylor-Henry

(℅ attorney Maggie Dalton)

Dear Ms. Baylor-Henry,

It has been a while since I last wrote to you. I hope this letter finds you well.

Below is the 5-year trading chart for PTE. This is exactly what a textbook
pump and dump (P&D) securities fraud looks like after most of the fraudsters have
gotten out with their illegal profits. Phillip Frost, Barry Honig, Michael Brauser,
Harvey Kesner and other members of the Frost gang made millions on this fraud
by cheating investors. You know the story.

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 The PTE P&D was apparent to me before the pump even began. I filed a
SEC whistleblower complaint on December 20, 2016 based on typical signs of a
Frost gang P&D in PTE's (then COOL's) SEC filings. Other Frost gang critics and
skeptics also recognized the P&D at an early point. The share price peaked in mid-
2018. Then Frost, Honig and Brauser were sued on September 7, 2018 by the SEC
for P&D securities frauds at other companies.

You were brought into PTE by the Frost gang and their associates in their
efforts to cover up the P&D fraud. Instead, you were key in ousting PTE CEO and
Chairman Denver Lough, who had colluded with the Frost gang in the P&D.

The PTE P&D fraud was based on two mutually incompatible claims that
the Frost gang foisted onto the investing public, namely: (1) PTE's SkinTE
product was revolutionary and patentable; and (2) SkinTE did not require rigorous
testing to obtain FDA approval. After the P&D, PTE is now left trying to massage
its many previous misrepresentations into a viable business. In doing so and in the
face of serious potential civil and criminal liabilities, insiders to the P&D securities
fraud keep pretending that PTE is a normal company with a legitimate business
story. However, PTE is seriously hampered by the frauds of its past and the
company's perceived need to spend much of its energy and resources to cover up
those past frauds.

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 Given the dysfunctional environment at PTE, it is not surprising that a
significant amount of nonsense continues. For example, I wrote to you about a
"mini-P&D" that happened in September of 2019.
https://www.scribd.com/document/427438627/September-23-2019-mini-pump-
and-dump-at-PTE

Other nonsense at PTE has resulted from PTE's decisions to cut executive
salaries and concurrently allow its executives to sell shares of stock to make up for
the salary cuts, and to compensate board members with shares and options instead
of cash. Here are PTE's most recent SEC filings, showing mostly Form 4's. Form
4 is used to report insider selling of stock (among other things).

Here is a summary of PTE's recent Form 4 filings:

10-20 Hoyler sells 9,999 shares at 1.03
10-20 Seaburg sells 31,032 shares at 1.017

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10-20 Hague sells 10,546 shares at 1.07
10-9 Hague sells 2,563 shares at 1.12
10-5 Cohen acquires 36,165 shares at 1.03 (director shares in lieu of cash
compensation)
10-5 Baylor-Henry acquires 12,135 shares at 1.03 (director shares in lieu
of cash compensation)
10-5 Dyer acquires 10,670 options at 1.04 (director options in lieu of cash
compensation)
10-5 Lough gets 11,111 new shares, sells 3,301 shares at 1.02
10-1 Seaburg sells 8,514 shares at 1.033
9-30 Hoyler sells 936 shares at 1.01
9-29 Hague sells 5,283 shares at 1.04
9-23 Hoyler sells 3,500 shares at 1.02
9-4 Seaburg sells 5,600 shares at 1.126
9-3 Lough gets 11,111 new shares, sells 3,479 shares at 1.09
8-25 Dyer sells 1,000 shares at 1.2711

Since it seems likely that PTE's executives have knowledge of PTE's

concealed frauds, the selling of shares by these executives would seem to be a
highly questionable practice. Yet, it has been going on for a long time. On
November 19, 2019, Hoyler sold 7,100 shares at 3.15. Further, two PTE
executives sold shares during the mini-P&D in September of 2019.

PTE's balance sheet, capital raising experience, and cash flow statements
show why PTE is eager to conserve its cash.

PTE still has significant cash on hand ($30 million as of June 30, 2020) from
its fairly recent capital raises. However, PTE's concealed frauds would be a factor
in any new effort to sell shares by the company. Significant erosion of the share
price since its recent capital raises are also a detriment to the company's ability to
raise new capital.

PTE's cash flow statement goes to the heart of PTE's struggle to remain
solvent. The company is bleeding money, and its lead product costs far more to
produce and promote that the meager revenues it brings in. Further, as of June 30,
PTE's accounts receivable were over twice as much as PTE's product revenue for
the quarter, indicating that PTE might not be getting paid for all the product it
"sells." Here is PTE's most recent cash flow statement:

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 Instead of being a legitimate company, PTE is now mostly a shell that exists
to conceal past frauds with the pretense of an ongoing business. However, many
investors are not being fooled by PTE anymore. Still, active trading in PTE
continues. The nature of such trading is somewhat revealed by recent posts on
Twitter. Here is a sampling:

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 Ms. Baylor-Henry, I am fairly sure that your experience with PTE has not
turned out like you expected based on the representations you heard two years ago.
I hope that you are cooperating with the SEC and the DOJ so that this mess can be
cleaned up and you can get on with your life.

This letter is being posted on Scribd with a link from Twitter.

Lee Pederson

Cc: SEC OIG

Bcc: SEC and DOJ (FBI and US Attorney’s Office)
Journalists and business writers
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