June 16, 2019

2126 Lyndale Ave S #6

Minneapolis, MN 55405

Ms. Margaret Dalton

Stoel Rives LLP
33 S Sixth St., Suite 4200
Minneapolis, MN 55402

RE: PolarityTE (PTE)

by email

Dear Ms. Dalton,

In response to your email/letter to me dated June 13, 2019, I suggest that you and PTE
have three legal options. You can:
1) file a frivolous lawsuit against me; and/or
2) file a groundless claim against me with the lawyers' board;
or
3) do nothing.

Your letter references three letters that I have written to Ms. Baylor-Henry. However, I
have written a number of other letters to Ms. Baylor-Henry that you did not mention. This leads
me to believe that Ms. Baylor-Henry has not shared all the letters with you. Further, this
suggests that Ms. Baylor Henry is not really a client of yours. I note that Ms. Baylor-Henry has
not previously expressed any objection to my writing to her over a period going back to
December of 2018.

Ms. Baylor-Henry is not cc'd on either of your letters to me. This also suggests that Ms.
Baylor Henry is not your client.

A public corporation such as PTE has many stakeholders and constituents, including
shareholders, employees, officers and directors. It is not uncommon that corporate stakeholders
and constituents have conflicting interests. According to a recent PTE 8-K filing, "independent
members of the Board of Directors of PolarityTE, Inc. (the “Company”) representing a majority
of the Board … placed Denver Lough … on indefinite administrative leave …" Thus, it is clear
that there is an actual conflict between members of the PTE BOD and former CEO Lough.
There may be other conflicts between and among board members and officers. In order for a
Minnesota attorney to ethically represent parties having conflicting interests, the attorney must
obtain written consents under MRPC Rule 1.7(b)(4).

In your first letter, you wrote to me that you represent PolarityTE, but you did not
mention that you represented Ms. Baylor-Henry or any other PTE officer or director. In your

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second letter, you wrote to me that you "represent PolarityTE (which includes its directors and
officers)." Therefore, you now must have all the required written consents in place in order to be
in compliance with MRPC Rule 4.1.

I request that you provide me with all of the following:

1) Proofs showing that you are aware of the dates and contents of all the letters that I have
written to Ms. Baylor-Henry;
2) Assurances that you had written conflict waivers in place for all of PTE's 14 officers and nine
directors before you sent your June 13 email/letter to me;
3) An explanation as to why Ms. Baylor-Henry did not previously object to my communications
to her; and
4) Assurances that Ms. Baylor-Henry has been provided with this email/letter and all other
relevant communications.

If you do not provide all of the above by June 19, 2019, I will conclude that Ms. Baylor-
Henry is not really your client, and I will resume direct communication to Ms. Baylor-Henry.

In the meantime, thank you for your kind offer to act as a conduit of information to Ms.
Baylor-Henry, the other board members, and the officers of PTE. I have already covered many
of what I see as the red flags for fraud at PTE in my previous letters to Ms. Baylor-Henry, so I
won't go over all of them in detail right now. However, new activities at PTE keep stirring up
the old issues, as well as raising new ones. Here is a list of recent red flags about PTE.

1. PTE has not provided any explanation for the removal of Denver Lough from his
position as CEO.

2. BOD member Steve Gorlin recently sold $300K of PTE shares. No explanation was
given as to how such sales comported with the lockup provisions of the April 10, 2019
underwriting agreement with Cantor Fitzgerald.
https://www.sec.gov/Archives/edgar/data/1076682/000149315219005166/ex1-1.htm

3. Instead of using legitimate peer-reviewed scientific and medical publications, PTE

appears to be using popular news media to promote its SkinTETM product. PTE has not proven
the safety or efficacy of SkinTE through clinical trials.
https://www.dailymail.co.uk/health/article-6952033/Woman-undergoes-radical-treatment-
regenerate-skin-treat-burn-wounds.html
https://www.healthline.com/health-news/advancements-being-made-in-treatment-of-foot-leg-
wounds-in-people-with-diabetes

Here is a summary of my observations and opinions of what has been and is going on at
COOL / PTE.

1. Phillip Frost is the leader of a white collar gang that specializes in pump and dump
(P&D) securities frauds.

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 2. Members of the Frost gang include Frost, Barry Honig and John Stetson, the former
CFO at COOL / PTE.

3. The amended complaint in my lawsuit against Frost et al provides details of the Frost
gang's P&D fraud at BZNE / COCP.

4. The amended complaint in SEC v Honig et al provides details of the Frost gang's P&D
frauds at BZNE / COCP, MGTI and MBVX.

5. Both my complaint and the SEC complaint describe the general method of a Frost
gang P&D fraud.

6. The events at COOL / PTE match the general method of a Frost gang P&D fraud.

7. Frost, Honig and Stetson were all involved in pivoting COOL from an online gaming
company into a regenerative medicine company.

8. On August 3, 2016 COOL filed a Registration Statement (333-211031) listing selling

shareholders (among others) as Frost, Honig, Brauser, Grander, O’Rourke, ATG, GRQ, FGIT,
Melachdavid and Stetson. These ten individuals and entities were all named as defendants in
SEC v Honig. The RS authorized the sale of over 3.4 million common shares – a huge
percentage of the company. The RS became effective on August 29, 2016.

9. The 2016 COOL RS was prepared by Frost gang attorney Harvey Kesner. According
to footnote 26, Kesner was the managing member of three other selling shareholders. Kesner also
apparently controlled COOL's transfer agent, Equity Stock Transfer.
https://www.barrons.com/articles/the-lawyer-at-the-center-of-sec-pump-and-dump-case-
1538675403

10. Another selling shareholder, Marlin Capital, was managed by Honig and Brauser.

11. PTE board member Jeff Dyer co-wrote a 2017 Forbes article touting PolarityTE.
https://www.forbes.com/sites/innovatorsdna/2017/08/08/polarityte-will-this-biotech-be-the-next-
amazon-or-tesla/#7d0f0b7e363a

12. Denver Lough received about $100 million in stock in exchange for his patent
application for SkinTE.

13. Both the Lough patent application and early publications describe the use of
scaffolding materials and hormones in SkinTE constructs.

14. Without the scaffolding materials and hormones, there is no valuable patentable
subject matter in the Lough patent application.

15. Without the scaffolding materials and hormones, SkinTE would essentially be
"minced skin" and therefore be unpatentable in view of the prior art.

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https://www.ncbi.nlm.nih.gov/m/pubmed/11855913/

16. COOL / PTE claims that SkinTE is eligible for FDA's 361 pathway, which exempts
products from expensive and time-consuming clinical trials to prove safety and efficacy.

17. The 361 pathway prohibits the use of scaffolding material and hormones.

18. COOL / PTE has promoted and sold its stock based on the mutually inconsistent
representations that (a) SkinTE is patentable; and that (b) SkinTE is eligible for the 361
regulatory pathway.

19. Frost, Honig and Stetson have made millions of dollars in profits from selling COOL
/ PTE shares at artificially inflated prices based on COOL / PTE's representations.

20. COOL / PTE's June 29, 2017 investor presentations shows that one step in the
SkinTE manufacturing process is to "imprint cells in laboratory in [a] 3D system using our
platform technology." The accompanying visual aid depicts cells being imprinted in scaffolding
material.

21. Later PTE switched its presentations to show SkinTE being applied as a paste from a
syringe.

22. PTE's June 10, 2019 investor presentation implies that SkinTE does not involve
scaffolding or hormones.

23. PTE has not publicly disclosed the materials and methods used in SkinTE.

24. COOL / PTE's representations about the materials and methods used in SkinTE have
been wildly inconsistent.

25. SkinTE cannot be both patentable and 361 eligible.

26. Either the Frost gang made up the 361 pathway story in order to pump up the stock
price, or PTE paid Lough the equivalent of $100 million for a patent that does not protect
SkinTE in order to pump up the stock price.

27. My own speculation is that, in order to prolong their fraud, COOL / PTE has changed
the SkinTE formulation over time because of the inconsistency described in paragraph 18.

PTE is now in a tough place. PTE started out by lying, and now it's in the phase of
denying. Without a change in direction, PTE will soon be dying. The company faces liabilities
for its past representations, but PTE needs to come clean about its past and face these liabilities
in order to move forward with integrity.

Your June 13 letter alleges that I "have a practice of disseminating false or misleading
information regarding PolarityTE and its officers and directors." I invite you to specify such

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false or misleading information. You are more than welcome to bring your specific allegations
against me in the form of a lawsuit. Given the accusations in your letter, such a lawsuit would
require the joinder of specific PTE directors (Baylor-Henry and Lough). As a practical matter, it
would bring additional attention to the financial fraud at PTE, and it would also publicly reveal
the scientific fraud at PTE.

Your June 13 email/letter is now posted on Scribd.com, with a link posted from my
Twitter account. This email/letter will be posted similarly.

Signed,
/Lee Pederson/

P.S. I appreciate your sense of humor in writing that "PTE is sharing information concerning its
stock with appropriate authorities." Good joke - that's a real corker. There's nothing quite like
"sharing" information with the Feds after you get a subpoena from the SEC!

Cc:
SEC OIG
Veronica Montenegro, Pomerantz LLP
Joe Dixon (attorney for Phillip Frost)

Bcc:
Federal agents (SEC and DOJ)
Journalist and business writers
Other interested individuals