Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X ] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The number of shares of Predictive common stock outstanding as of ~~May 15, 2019~~February 14, 2020 was ~~272,535,397.~~295,936,766.


	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Unaudited Condensed Consolidated Balance Sheets as of ~~March~~December 31, 2019 and June 30, ~~2018~~2019	32

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and ~~nine~~six months ended ~~March~~December 31, 2019 and 2018	43

	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~nine~~three and six months ended ~~March~~December 31, 2019 and 2018	54-5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity ~~as of March~~for the six months ended December 31, 2019 and ~~June 30,~~ 2018	6

	Unaudited Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2941

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3655

Item 4.	Controls and Procedures	3655

	PART II - OTHER INFORMATION	37
		56
Item 1.	Legal Proceedings	3756

Item 1A.	Risk Factors	3757

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3757

Item 3.	Defaults Upon Senior Securities	3758

Item 4.	Mine Safety Disclosures	3758

Item 5.	Other Information	3858

Item 6.	Exhibits	3959


								As of
		March 31, 2019		June 30, 2018				December 31,		June 30,
		Unaudited		Audited				2019		2019
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
	Cash	$	1,826,420	$	1,206,139	Cash	$	255,502	$	1,618,244
	Accounts receivable		812,443		719,068	Accounts receivable, net of allowance for doubtful accounts of $864,331 and $687,064		437,377		1,250,476
	Inventory		3,682,658		3,791,374	Due from equity method investee		-		184,443
	Other current assets		1,233,469		17,551	Inventory		3,845,101		5,775,185
						Other current assets		217,224		103,080
Total current assets	Total current assets		7,554,990		5,734,132	Total current assets		4,755,204		8,931,428
Fixed assets, net of depreciation	Fixed assets, net of depreciation		7,107,638		773,870	Fixed assets, net of depreciation		6,156,360		6,974,441
Operating lease right of use assets						Operating lease right of use assets		1,528,163		-
License agreements, net of amortization	License agreements, net of amortization		15,067,404		20,962,620	License agreements, net of amortization		17,063,522		18,062,315
Patents, net of amortization	Patents, net of amortization		7,351,127		7,761,187	Patents, net of amortization		6,468,137		6,850,490
Trade secrets, net of amortization	Trade secrets, net of amortization		42,846,223		8,096,311	Trade secrets, net of amortization		42,307,169		45,336,335
Other intangible assets, net of amortization	Other intangible assets, net of amortization		411,000		-	Other intangible assets, net of amortization		337,526		383,931
Equity method investments	Equity method investments		51,774,200		55,392,622	Equity method investments		35,329,167		51,717,719
Goodwill	Goodwill		5,254,451		5,254,451	Goodwill		5,254,451		5,254,451
Other long-term assets	Other long-term assets		12,069		12,000	Other long-term assets		14,543		67,075
Total assets	Total assets	$	137,379,102	$	103,987,193	Total assets	$	119,214,242	$	143,578,185
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	2,738,267	$	1,322,149	Accounts payable	$	3,823,829	$	4,943,178
Accrued liabilities	Accrued liabilities		1,555,710		1,034,905	Accrued liabilities		1,931,818		1,857,771
Deferred revenue	Deferred revenue		501,685		-	Deferred revenue		512,280		469,376
Capital lease obligation, current portion			2,114,491		-
Operating lease liability, current portion						Operating lease liability, current portion		859,442		-
Finance lease liability, current portion						Finance lease liability, current portion		646,020		504,488
Subscription payable, current portion						Subscription payable, current portion		2,155,000		6,300,000
Total current liabilities						Total current liabilities		9,928,389		14,074,813
Operating lease liability						Operating lease liability		714,713		-
Finance lease liability						Finance lease liability		1,189,104		1,511,554
Subscription payable	Subscription payable		4,950,000		4,409,390	Subscription payable		7,531,610		4,040,610
Total current liabilities			11,860,153		6,766,444
Capital lease obligation			1,784,471		-
Long-term subscription payable			5,840,610		10,965,611
Notes payable						Notes payable		10,080,000		400,000
Deferred tax liabilities	Deferred tax liabilities		5,533,619		4,917,323	Deferred tax liabilities		1,536,445		11,014,745
Total liabilities	Total liabilities		25,018,853		22,649,378	Total liabilities		30,980,261		31,041,722

Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Common stock, par value $0.001, 272,530,397 and 247,624,403
shares issued and outstanding at March 31, 2019 and
June 30, 2018; 900,000,000 shares authorized			272,530		247,624
Common stock, par value $0.001, 282,985,560 and 273,761,955						Common stock, par value $0.001, 282,985,560 and 273,761,955
shares issued and outstanding at December 31, 2019 and						shares issued and outstanding at December 31, 2019 and
June 30, 2019; 900,000,000 shares authorized						June 30, 2019; 900,000,000 shares authorized		282,986		273,762
Additional paid-in capital	Additional paid-in capital		146,137,139		108,049,300	Additional paid-in capital		163,224,275		153,604,830
Common stock subscriptions receivable			-		(1,025,000)
Accumulated deficit	Accumulated deficit		(33,840,410)		(25,813,957)	Accumulated deficit		(74,970,125)		(41,102,849)
Total controlling interest	Total controlling interest		112,569,259		81,457,967	Total controlling interest		88,537,136		112,775,743
Non-controlling interest	Non-controlling interest		(209,010)		(120,152)	Non-controlling interest		(303,155)		(239,280)
Total stockholders' equity	Total stockholders' equity		112,360,249		81,337,815	Total stockholders' equity		88,233,981		112,536,463
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	137,379,102	$	103,987,193	Total liabilities and stockholders' equity	$	119,214,242	$	143,578,185

Three months ended March 31,

Nine months ended March 31,

2019

2018

2019

2018
Revenue

$
11,295,618

$
4,232,650

$
30,046,456

$
9,472,404
Cost of goods sold

4,773,332

1,794,363

10,881,024

3,553,912
Gross profit

6,522,286

2,438,287

19,165,432

5,918,492

Operating expenses:

     Sales and marketing

2,888,309

4,321,441

8,726,902

10,040,226
     General administrative

4,835,652

1,360,304

10,380,413

4,700,683
     Research and product development

1,458,265

366,656

3,823,908

416,536
     Amortization and depreciation expense

2,374,006

1,148,262

6,075,090

3,386,626
Total operating expenses

11,556,232

7,196,663

29,006,313

18,544,071

     Operating loss

(5,033,946)

(4,758,376)

(9,840,881)

(12,625,579)

     Other income (loss), net

81,988

(25,449)

(831,998)

178,085

Loss before income taxes

(4,951,958)

(4,783,825)

(10,672,879)

(12,447,494)

     Benefit from income taxes

(1,215,312)

(1,579,463)

(2,541,290)

(4,905,699)

Net loss

$
(3,736,646)

$
(3,204,362)

$
(8,131,589)

$
(7,541,795)

     Net loss non-controlling interest

(27,735)

(10,946)

(88,858)

(32,837)

Net loss controlling interest & comprehensive loss

$
(3,708,911)

$
(3,193,416)

$
(8,042,731)

$
(7,508,958)

Weighted average common shares

272,029,651

234,698,827

263,060,001

234,698,827

Basic & diluted loss per share

$
(0.01)

$
(0.01)

$
(0.03)

$
(0.03)


					Six months ended December 31,
	Nine months ended March 31,				2019		2018
	2019		2018
Cash flows from operating activities:
Net loss	$	(8,131,589)	$	(7,541,795)	$	(33,931,151)	$	(4,394,943)
Adjustments to reconcile net loss to net cash provided (used) in operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		6,075,090		3,386,626		5,385,318		3,700,091
Provision for bad debts						177,560		-
Share based compensation		4,238,790		8,369,120		9,628,669		1,982,854
Deferred income taxes		(2,541,290)		(4,905,699)		(9,478,300)		(1,325,978)
Non-cash lease expense						329,515		-
Losses on equity method investment		1,108,422		22,647		16,388,552		914,898
Gain on bargain purchase		(272,757)		-
Changes in operating assets and liabilities:
Accounts receivable		(80,331)		(621,835)		635,982		(29,650)
Inventory		977,556		(852,084)		1,930,084		(121,072)
Prepaid expenses		(88,542)		110		(114,144)		(21,309)
Other assets		(57,273)		(183,335)		52,532		(6,569)
Accounts Payable		808,725		(56,129)
Accounts payable						(707,469)		1,345,996
Accrued liabilities		520,805		(186,426)		74,047		14,315
Deferred Revenue		501,685		-
Operating lease liability						(329,067)		-
Deferred revenue						42,904		-
Net cash provided by (used in) operating activities		3,059,291		(2,568,800)		(9,914,968)		2,058,633

Cash flows from investing activities:
Purchases of property and equipment		(2,554,966)		(384,234)		(476,856)		(1,204,756)
Purchases of intellectual property		(163,461)		(2,200,984)
Cash acquired from acquisitions, net		885,674		-		-		799,980
Cash payments for subscription payable		(1,634,390)		-
Cash payments on equity method investee stock subscription						(470,000)		(1,184,392)
Capitalization of patent acquisition costs						-		(140,675)
Net cash used in investing activities		(3,467,143)		(2,585,218)		(946,856)		(1,729,843)

Cash flows from financing activities:
Cash proceeds from stock subscriptions		1,025,000		4,608,280		-		1,025,000
Exercises of stock options		3,133		-
Proceeds from issuance of promissory notes and borrowings on revolving line of credit						9,680,000		-
Principal payments on finance leases						(180,918)		-
Net cash provided by financing activities		1,028,133		4,608,280		9,499,082		1,025,000

Net increase (decrease) in cash and cash equivalents		620,281		(545,737)		(1,362,742)		1,353,790
Cash and cash equivalents at the beginning of the period	$	1,206,139	$	968,202	$	1,618,244	$	1,206,139
Cash and cash equivalents at the end of the period	$	1,826,420	$	422,465	$	255,502	$	2,559,929

Predictive Technology Group, Inc., together with its subsidiaries (collectively, “PTG”, “Predictive” or the “Company”), develops and commercializes discoveries and technologies involved in novel molecular diagnostic, ~~and pharmaceutical therapeutic/Human Cells, Tissues~~therapeutic, and Human Cellular and Tissue-Based Products (“HCT/Ps”). The Company uses this information as the cornerstone in the development of new diagnostics that assess a person’s risk of disease and develop pharmaceutical therapeutics and HCT/Ps ~~designed~~for use by healthcare professionals to ~~effectively prevent and treat the disease.~~improve outcomes in their patients. The Company’s corporate headquarters are located in Salt Lake City, Utah.

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (CODM) in making decisions regarding resource allocation and assessing performance. The Company operates in two reportable ~~segments:~~segments, which are differentiated by product. The HCT/~~Ps and diagnostics and therapeutics. Predictive Biotech’s HCT/Ps are processed in our FDA registered lab. Our~~P segment offers minimally manipulated tissue products ~~are~~intended for homologous use, prepared utilizing proprietary extraction methods that reduce the loss of important scaffolding, growth ~~factor~~factors and ~~general cytokines~~cytokines. The Company’s Diagnostics and ~~are intended for homologous use. Predictive Technology's diagnostics and therapeutics~~Therapeutics segment uses data analytics for disease identification and subsequent therapeutic intervention through ~~unique~~ novel gene-based diagnostics, ~~biotechnology treatments~~ and companion therapeutics. Lastly, the “Unallocated Corporate” column in the table below represents those headquarters activities that do not qualify as operating segments and which are not allocated to operating segments in information provided to the CODM. We currently sell our products exclusively in the United States.

During the fourth quarter of 2019, we realigned our segment reporting to separately present headquarters costs in information available to the CODM. The presentation of the comparative information has been recast to conform to the 2019 presentation.

Segment revenue and operating income (loss)~~was~~were as follows during the periods presented:


	HCT/Ps		Diagnostics & Therapeutics		Total
Three months ended March 31, 2019
							HCT/Ps		Diagnostics & Therapeutics			Unallocated Corporate	Total
Three months ended December 31, 2019
Revenues	$	11,285,218	$	10,400	$	11,295,618	$	7,289,265	$	47,375	$	-	$	7,336,640
Depreciation and amortization		782,171		1,591,835		2,374,006		937,923		1,756,560		80,590		2,775,073
Segment operating income (loss)		694,787		(5,728,733)		(5,033,946)
Three months ended March 31, 2018
Share based compensation								1,242,875		254,353		3,136,841		4,634,069
Segment operating loss								(7,067,094)		(3,261,117)		(3,399,191)		(13,727,402)
Three months ended December 31, 2018
Revenues	$	4,232,650	$	-	$	4,232,650	$	10,687,036	$	-	$	-	$	10,687,036
Depreciation and amortization		883,751		264,511		1,148,262		771,416		1,181,317		82,627		2,035,360
Share based compensation								316,089		8,186		686,230		1,010,505
Segment operating loss		(927,498)		(3,830,978)		(4,758,376)		(507,527)		(1,249,673)		(719,591)		(2,476,791)
Nine months ended March 31, 2019
Six months ended December 31, 2019
Revenues	$	30,036,056	$	10,400	$	30,046,456	$	15,473,896	$	122,002	$	-	$	15,595,898
Depreciation and amortization		2,295,055		3,780,035		6,075,090		1,836,868		3,387,858		160,592		5,385,318
Segment operating income (loss)		3,427,191		(13,268,072)		(9,840,881)
Nine months ended March 31, 2018
Share based compensation								2,914,331		704,454		6,009,884		9,628,669
Segment operating loss								(13,611,080)		(6,489,756)		(6,518,740)		(26,619,576)
Six months ended December 31, 2018
Revenues	$	9,472,404	$	-	$	9,472,404	$	18,750,838	$	-	$	-	$	18,750,838
Depreciation and amortization		2,606,218		780,408		3,386,626		1,512,884		2,012,840		175,358		3,701,082
Share based compensation								371,838		8,186		1,602,830		1,982,854
Segment operating loss		(1,849,920)		(10,775,659)		(12,625,579)		(838,369)		(2,216,214)		(1,752,352)		(4,806,935)



		As of March 31,		As of June 30,		As of December 31,		As of June 30,
Total Assets		2019		2018		2019		2019
HCT/Ps	$	16,655,285	$	11,206,096	$	16,302,925	$	21,052,082
Diagnostics and therapeutics		120,723,817		92,781,097		101,442,833		120,665,445
Unallocated corporate						1,468,484		1,860,658
Total Assets	$	137,379,102	$	103,987,193	$	119,214,242	$	143,578,185

The accompanying ~~condensed~~ consolidated financial statements have been prepared by Predictive Technology Group, Inc. (the “Company” or “Predictive” ~~or “PTG”~~) in accordance with U.S. generally accepted accounting principles (“GAAP”) for ~~interim~~ financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly all financial statements in accordance with U.S. GAAP.

The condensed consolidated financial statements herein should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended June 30, ~~2018,~~2019, included in the Company’s Annual Report on Form 1010-K for the fiscal year ended June 30, ~~2018.~~2019. Operating results for the 3three and 9six months ended ~~March~~December 31, 2019 may not necessarily be indicative of results to be expected for any other interim period or for the full fiscal year.

The Company operates on a fiscal year basis with the fiscal year ending on June 30.

These consolidated financial statements include the financial statements of Predictive Technology Group, Inc. and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. ~~Certain prior year amounts have been reclassified to conform to the current year presentation.~~

The Company considers all highly-liquid investments with a maturity of three months or less, when purchased, to be cash equivalents. The Company places its temporary cash investments with high-quality financial institutions.

~~These~~The accompanying financial statements ~~were~~have been prepared ~~on a going concern basis. The going concern basis assumes~~under the assumption that the Company will continue ~~in operation for~~to operate as a going concern, which contemplates the ~~foreseeable future and will be able to realize its~~realization of assets and ~~discharge its~~the settlement of liabilities ~~and commitments~~ in the normal course of business. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that may result from any inability of the Company to continue as a going concern.

The Company incurred a ~~subsidiary~~net loss of ~~PTG, began~~$33,867,276 for the six months ended December 31, 2019 and net cash outflows from operations ~~during~~of $9,914,968. At December 31, 2019, the ~~fiscal year ended June 30, 2017. Since~~Company had $255,502 of cash and negative working capital of $4,861,267. The Company's historical and current use of cash in operations combined with limited liquidity resources raise substantial doubt regarding the ~~inception~~Company’s ability to continue as a going concern. Management may seek additional capital through debt financings, collaborative or other funding arrangements with partners, or through other sources of ~~operations, revenues have exceeded cash expenses and~~financing. Should the Company seek additional financing from outside sources, the Company may not be able to raise such ~~excess contributes~~financing on terms acceptable to the ~~overall operations~~Company or at all. If the Company is unable to raise additional capital when required or on acceptable terms, this could have a material adverse effect on liquidity. In such a case, the Company may be required to scale back or to discontinue the promotion of ~~PTG.~~

~~In addition, PTG has raised sufficient capital through stock subscriptions to fund its obligations under its licenses and other agreements~~currently available products, scale back or discontinue the advancement of product candidates, reduce headcount, file for ~~the development of molecular diagnostics products under license in Predictive Therapeutics, LLC (“Predictive Therapeutics”), a subsidiary of PTG.~~ bankruptcy, reorganize, merge with another entity, or cease operations.

~~Accounts~~Trade accounts receivable are primarily comprised of amounts due from sales of the Company’s HCT/P products that are recorded at the invoiced ~~amount. At the present time most sales are collected through~~amount, and deposits in transit from credit card ~~payments, however from time to time, credit~~processors. The allowance for doubtful accounts is ~~granted to customers~~based on ~~a short-term basis without requiring collateral. As such, these~~the Company’s best estimate of the amount of probable losses in the Company’s existing accounts receivable, ~~do not bear interest, although a finance charge may be applied~~which is based on historical write-off experience, customer creditworthiness, facts and circumstances specific to ~~receivables that~~outstanding balances, and payment terms. Account balances are ~~past due.~~charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company ~~has in place~~does not have any off-balance-sheet credit ~~policies~~exposure related to its customers and ~~procedures and approval processes for sales returns and credit memos.~~

Inventories consist primarily of HCT/Ps produced by Predictive ~~Biotech.~~Biotech, Inc. ("Predictive Biotech"), a wholly owned subsidiary and laboratory supplies used in genetic testing performed by Predictive Laboratories, Inc. ("Predictive Labs"). We value inventory at the lower of cost or net realizable value. We determine the cost of inventory using the standard cost method, which approximates actual cost based on a first-in, first-out method. All other costs, including administrative costs, are expensed as incurred.

We analyze our inventory levels at least ~~annually~~quarterly and write down inventory that has a cost basis in excess of its expected net realizable value, or that is considered in excess of normal operating levels, as determined by management. We also reserve for the quantity of quarantined (WIP) inventory that is not expected to pass quality control based on historical averages. The related costs are recognized as cost of goods sold in the consolidated statements of operations.

Stock subscriptions are recorded as contra-equity on the day the subscription agreement is signed and accepted by the Company. ~~All~~As of December 31, 2019 and June 30, 2019, all stock subscribed ~~as of the date of these financial statements~~ has been ~~collected. The stock is not issued until subscription payments are collected.~~fully paid.

Amounts paid in advance for expenses are accounted for as prepaid expenses and classified as current assets if such amounts are to be recognized as expense ~~with~~within one year from the ~~current period.~~balance sheet date.

Lab equipment, furniture and computer equipment are stated at cost less accumulated depreciation. Depreciation ~~and amortization are~~is computed using the straight-line method based on the lesser of estimated useful lives of the related assets or the underlying lease ~~terms.~~term. Lab equipment items have depreciable lives of 5 years, furniture items have depreciable lives of 5 to 7 years, and computer equipment items have depreciable lives of 3 years. Repair and maintenance costs are charged to expense as incurred. Amortization of assets recorded under finance leases is included in depreciation expense.

The Company reviews property and equipment for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property and equipment are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value.

We have entered into operating and finance lease agreements primarily for office and laboratory facilities and laboratory equipment located in Salt Lake City, Utah with lease periods expiring between 2020 and 2022.

We determine if an arrangement is a lease at inception. For all classes of underlying assets, we elect not to recognize right of use assets or lease liabilities when a lease has a lease term of 12 months or less at the commencement date and does not include an option to purchase the underlying asset that we are reasonably certain to exercise. Operating lease assets and liabilities are included on our consolidated balance sheet beginning July 1, 2019. Finance lease assets are included in property and equipment, net.

Operating lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in most of our leases is not readily determinable. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base, non-cancelable, lease term when determining the lease assets and liabilities. Operating lease expense is recognized on a straight-line basis over the lease term.

Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We combine fixed payments for non-lease components with our lease payments and account for them together as a single lease component, which increases the amount of our lease assets and liabilities.

Intangible and other long-lived assets are comprised of acquired patents, licenses, trade secrets and other intellectual property. Acquired intangible assets are recorded at fair value and amortized over the shorter of the contractual life or the estimated useful life.

The Company reviews definite-lived intangible assets for impairment. Long-lived assets ~~such as property, equipment, and definite-lived~~are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value.

Indefinite-lived intangible assets not subject to ~~depreciation and~~ amortization ~~as well as acquisition costs of subsidiaries,~~ are reviewed for impairment annually, typically at the beginning of the fourth fiscal quarter, or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Such events and circumstances may include sweeping regulatory changes, shifts in market demand that would negatively impact revenue, ~~restrictions to capital markets,~~ overall industry deterioration, dramatic increase in the number of competitors, rapidly increasing costs related to production inputs, significant changes in Company management or Company strategy, ~~and/~~or significant litigation. The Company first ~~will assess~~assesses qualitative factors above to determine whether it is necessary to perform the ~~two-step~~quantitative impairment test to identify any impairment loss.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated future undiscounted net cash flows, or fair value, of the related asset or group of assets over their remaining lives.

Certain of the Company’s patents are currently subject to litigation (see Note 14) to determine whether the seller of the patents had satisfactory title to the patents that were then sold to the Company. These patents have a carrying value of $6,468,137 on our consolidated balance sheet as of December 31, 2019. While the litigation is in its early stages and may reach a broad range of possible outcomes, we have determined that it is at least reasonably possible that the patents may become impaired in the near term depending on the information gained during the legal discovery process and the outcome of the litigation.

The Company reviews equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable in accordance with generally accepted accounting principles. This determination requires significant judgment. In making this judgment, the Company considers available quantitative and qualitative evidence in evaluating potential impairment of these investments. If it is determined that an indicator of impairment exists, the Company assesses whether the carrying value exceeds the fair value of the asset. If the carrying value of the investment exceeds its fair value, the Company will evaluate, among other factors, general market conditions, the duration and extent to which the carrying value is greater than the fair value, and the Company’s intent and ability to hold, or plans to sell, the investment. The Company also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge will be recorded and a new carrying basis in the investment will be established. The Company recorded an impairment charge of $15,932,016 related to our equity method investment in Juneau Biosciences, LLC (see Note 7).

~~In May 2014, the Financial Accounting Standards Board (FASB) issued the converged standard on~~We derive our revenue ~~recognition with the objective~~primarily from sales of ~~providing a single, comprehensive model for all~~HCT/P products to clinicians. The majority of our contracts with customers ~~to improve comparability in the financial statements~~have a single performance obligation, and all of ~~companies reporting using International Financial Reporting Standards and U.S. GAAP. The standard contains principles that an entity must apply to determine the measurement~~our contracts with customers have a duration of ~~revenue and timing of~~less than one year. Revenue is recognized when it is recognized. The underlying principle is that an entity must recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. An entity can apply the revenue standard retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings (modified retrospective method).

The standard was effective for the Company beginning July 1, 2018. The Company elected to adopt the standard using the modified retrospective approach. This approach was adopted because the Company believes the new Standard has very little impact on revenue recognition for the current products sold.

The Company generates revenue by selling Human Cell and Tissue Products (HCT/P’s) to clinics and doctors. Revenue from these sales are recorded at the invoiced amount net of any discounts or contractual allowances. The Company has determined that the shipmentcontrol of the product ~~indicates transfer of control for revenue recognition purposes.~~

~~We have evaluated each of the five steps in Topic 606, which are as follows:~~

Our conclusion is that we have identified similar performance obligations under ASC Topic 606 as compared with deliverables and separate units of account previously identified under the old standard. As a result, the timing of our revenue appears to remain the same in comparison to the prior revenue recognition guidance.

~~We sell our products through a direct sales force and through distribution in the U.S. Revenues from these customers are recognized when risk of loss and title~~ passes to the customer, ~~which is generally when we receive~~typically upon confirmation ~~that~~of delivery of the product ~~has been delivered.~~ to the customer. As our products must remain frozen during transit, we typically ship our products overnight. Revenue is recognized in an amount that reflects the expected consideration to be received in exchange for such goods or services. As such, customer orders are recorded as deferred revenue prior to delivery of products or services ordered.

~~The Company also has significant experience~~Generally, we require authorization from a credit card or verification of receipt of payment before we ship products to customers. From time to time we grant credit to our customers with ~~historical discount patterns and uses this experience~~normal credit terms (typically 30 days). We do not recognize assets associated with costs to ~~finalize transaction prices. In accordance with ASU 2016-12, the Company elected to exclude from the measurement of transaction price, all taxes assessed by~~obtain or fulfill a ~~governmental authority that are both imposed on and concurrent~~contract with a ~~specific revenue-producing transaction~~customer, as the amortization period for any such costs if capitalized would be one year or less.

Shipping and ~~collected by~~handling is considered a fulfillment activity, as it takes place prior to the ~~Company from a~~ customer ~~(e.g. sales tax). As we generally sell to resellers, sales taxes collected are not material.~~

~~The Company has also elected to apply the practical expedient to not adjust revenue recognized for the effects~~obtaining control of the ~~time value of money. This practical expedient has been elected because the Company collects cash from~~product, and fees charged to customers ~~immediately upon shipment.~~

There are also certain considerations related to internal control over financial reporting that are associated with implementing Topic 606. We are currently evaluating our control framework for revenue recognition and identifying any changes that may need to be made in response to the new guidance. Disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance.

~~We bill our customers for shipping and handling charges, which~~ are included in net ~~sales for the applicable period, and the corresponding shipping~~revenue upon completion of our performance obligation. Shipping and handling ~~expense is reported~~expenses are included in cost of sales. We present revenue net of sales taxes, discounts, and expected returns.

We recognize a contract liability when customer payment precedes the completion of our performance obligations.

The following table provides information about deferred revenue from contracts with customers, including significant changes in deferred revenue balances during the period (in thousands).

The Company maintains product liability insurance and has not experienced any related claims from its ~~products~~product offerings. The Company also offers a warranty to customers providing that its products will be delivered free of any material defects. There have been no material costs incurred since inception based on estimated return rates. The Company reviews the adequacy of its accrual on a quarterly basis.

In order to determine the Company’s quarterly provision for income taxes, the Company uses an estimated annual effective tax rate that is based on expected annual income and applicable federal and state tax rates. Deferred tax assets and liabilities are recorded to reflect the future tax consequences attributable to the effects of differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax purposes. Deferred taxes are calculated by applying enacted statutory tax rates and tax laws to future years in which temporary differences are expected to reverse. The impact on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the rate change is enacted.

Comprehensive loss is comprised of net loss and other comprehensive loss. Other comprehensive loss is equal to net loss for the three and six months ended December 31, 2019 and 2018.

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined in the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or inputs that are corroborated by market data.

During the three and six months ended December 31, 2019 and 2018, we did not have any remeasurements of non-financial assets measured at fair value on a non-recurring basis subsequent to their initial recognition.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods. Key estimates in the accompanying unaudited condensed consolidated financial statements include, among others, revenue recognition, allowances for doubtful accounts and product returns, provisions for obsolete inventory, valuation of long-lived assets, and deferred income tax asset valuation allowances. Actual results could differ materially from these estimates.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance, as amended by subsequent ASUs, introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. For trade receivables, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. For public business entities that meet the definition of a U.S. Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently evaluating the impact of this update on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" (ASU 2019-12), which eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. This ASU also includes guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently assessing the impact of ASU 2019-12 on its consolidated financial statements.

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases ~~will be~~are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard iswas effective for us on July 1, ~~2019, with early adoption permitted. We expect to adopt the new standard on its effective date.~~2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. We ~~expect to adopt the new standard on July 1, 2019 and use~~used the effective date as our date of initial application. Consequently, financial information ~~will~~was not be updated, and the disclosures required under the new standard ~~will~~were not be provided for dates and periods before July 1, 2019.

The new standard provides a number of optional practical expedients in transition. We ~~expect to elect~~elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We ~~expect to elect~~elected all of the new standard’s available transition practical expedients that are applicable.

The new standard also provides practical expedients for an entity’s ongoing accounting. We ~~currently expect to elect~~elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also ~~currently expect to elect~~elected the practical expedient to not separate lease and non-lease components for all of our ~~leases.~~leases, other than for leases of real estate.

We expect that this standard will not have a material impact on our financial statements, as we have a limited volume of operating leases that do not qualify for the short term lease exemption. We currently do not expect a significant change in our leasing activities between now and the adoption of the standard.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provided a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additionally, this guidance expanded related disclosure requirements. During the first quarter of fiscal 2018, we adopted the new standard using the modified retrospective method. The adoption had no impact on the timing of the recognition of our revenue or costs. Additionally, we considered the disclosure requirements of the standard and determined that no additional disclosures were necessary.

In June 2018, the FASB issued ASU 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 supersedes Subtopic 505-50, “Equity—Equity-Based Payments to Non-Employees,” and is effective for all public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted ASU 2018-07 commencing January 1, 2019, with no material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” This standard aligns the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for internal-use software. The new guidance also prescribes the balance sheet, income statement and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. The Company early adopted ASU 2018-15 commencing January 1, 2019, with no material impact on its consolidated financial statements.

NOTE 2 ~~BUSINESS COMBINATIONS AND EQUITY METHOD INVESTMENTS~~CORRECTION OF PREVIOUSLY-ISSUED UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~On April 15, 2015, Global Enterprises Group, Inc. (“GLHO”) acquired 100%~~Subsequent to the issuance of ~~Predictive Therapeutics, LLC. After~~ the ~~acquisition, GLHO changed its name to Predictive Technology Group, Inc. On October~~Company's condensed consolidated financial statements for the three and six months ended December 31, 2015, the initial agreement was modified to make certain technical corrections and adjustments for contingencies which were not met at that date. The Company issued a total of 131,058,458 shares of common stock in this transaction. Under this merger agreement, there was a change in control which has been treated for accounting purposes as a reverse recapitalization.

~~On November 6, 2015,~~2018, the Company ~~announced~~discovered (i) an error in the Company's accounting for income taxes, primarily with regard to the impact of income taxes on the Company's accounting for business combinations and asset acquisitions, and (ii) a clerical error in the calculation of volatility used as an input to the Black-Scholes model used to value the warrants issued as consideration for the acquisition of ~~LifeCode Genetics, Inc. (“LifeCode”)~~certain intellectual property. As a result, the Company has corrected the accompanying condensed consolidated statements of operations and comprehensive loss and the statements of stockholders' equity for the three and six months ended December 31, 2018 from amounts previously reported to (i) record a benefit from income taxes of $713,526 and $1,325,978 for the three and six months, respectively, and (ii) record $358,333 and $632,233 in share based compensation expense for the three and six months, respectively , and (iii) record amortization expense related to intangible assets by $42,826 and $36,118 for the three and six months, respectively.

Additionally, the Company identified the following errors in the calculation of weighted average shares outstanding underlying the calculation of earnings per share for the three and six months ended December 31, 2018. Common shares in the amount of 23,127,666 issued prior to the 2017 fiscal year were thought to have been cancelled, when in fact they remain legally outstanding. The weighted average shares outstanding used to calculate earnings per share were also calculated incorrectly, such that the total corrected weighted average shares outstanding increased by 33,167,000 and 28,561,565 for the three and six months, respectively, from amounts previously reported. The error did not affect reported earnings per share in any period.

The condensed consolidated statement of cash flows for the six months ended December 31, 2018 has also been corrected for the adjustments to the condensed consolidated statement of operations discussed above, and to correct the presentation of certain investing and financing activities as ~~its wholly owned subsidiary. LifeCode held a strategic equity investment~~follows. First, cash acquired from the acquisition of ~~2,792,292 units~~InceptionDX, LLC was reclassified from financing to investing activities. Second, the amount of ~~Juneau Biosciences, LLC (“Juneau”).~~ cash paid under our subscription payable previously incorrectly reported as $1,142,089 and incorrectly included in financing activities. The cash paid under our subscription has been corrected to $1,184,392 by reclassifying certain immaterial noncash activity to operating activities and has been reclassified to investing activities.

In addition to the development of an assay and related services for the prognosis and monitoring of endometriosis in the infertility market which the Company has licensed, Juneau is developing technologies for the diagnosis of other women’s health issues.

~~The Company issued 6,561,870 common shares to acquire LifeCode with an acquisition date fair value of $16,404,675 based on our stock price.~~

A share exchange agreement was entered into on September 22, 2015 that required the Company to issue an additional 5,718,372 shares to former LifeCode shareholders to meet the terms of the exchange agreement. Using the OTC value (defined as the share price listed on the date of the transaction in the over-the-counter dealer markets and networks) for the additional shares issued results in an increase of the purchase price to $30,700,605, an increase of $14,295,930. A valuation performed by an external valuation specialist supports a September 22, 2015 value of the interest in Juneau of $16,520,150, which resulted in a day one impairment of $14,180,455. Net of the impact of the ~~impairment,~~corrections described above, the ~~Company recognized a deferred tax liability~~condensed consolidated statements of ~~$9,827,777 related~~operations for the six months ended December 31, 2018 includes certain insignificant corrections in presentation that were made to ~~differences between book and tax basis arising from~~conform to the ~~acquisition of Lifecode.~~fiscal 2019 annual financial statements.

The ~~fair value~~following tables present the effects of the ~~purchase consideration issued~~corrections to the ~~sellers~~condensed consolidated statements of ~~LifeCode was allocated to~~operations and comprehensive loss for the ~~units~~three and six months ended December 31, 2018 and the statement of ~~equity acquired, which are included in equity method investments on~~cash flows for the six months ended December 31, 2018.

~~Juneau reports to its members on a calendar year basis and LifeCode records its distributable share~~

Unaudited consolidated statement of ~~such reported income using the equity method.~~cash flows

On March 28, 2016, the Company announced the acquisition of ReNovo Biotech, Inc. as its wholly owned subsidiary. The acquisition provides the Company access to ReNovo Biotech’s cellular, tissue, biomaterial and regenerative medicine products and product candidates. This subsidiary is operated under the name Predictive Biotech, Inc. The Company issued 9,500,000 common shares to effect the acquisition, which was recorded at a fair value of $14,087,000. The fair value of the trade secrets was determined to approximate the value of the common stock paid as consideration. The Company also recognized deferred tax liabilities and goodwill of $5,254,451.

The purchase price was allocated to “trade secrets” including protocols to develop an amniotic allografts and umbilical cord allograft line of products in accordance with the provisions of ASC 805,~~Business Combinations~~~~. Such trade secrets were determined to be recognizable apart from any form of goodwill and are “technology-based”.~~

On August 22, 2018, the Company entered into an agreement captioned “Securities Purchase Agreement” with the members of Inception DX, LLC (“Inception”), a Utah limited liability company. Under the terms of the agreement, the Company acquired Inception for 15,500,000 shares of common stock. Inception owns laboratory equipment, partial interest in database records for over 31,900,000 individuals for use in genetics research, 400,000 units in Juneau Biosciences, LLC, initial CLIA registration, CLIA lab protocols, and other assets. Once the CLIA registration is completed, Inception will be used as a CLIA-certified laboratory by Predictive Technology Group, Inc. and its affiliates.

The stock issued was for cash, laboratory equipment, membership units in Juneau Biosciences, LLC (“Juneau units”), and trade secrets related to the DNA database and protocols related to a future ~~laboratory~~ use as a CLIA ~~lab.~~laboratory. The Juneau units were valued based on the value assigned when the Company entered into a subscription to purchase units of Juneau ($1.10 per unit). ~~The laboratory equipment was valued at market value as it had not been used and the Company is aware of the approximate market price of similar equipment.~~ The equipment will be depreciated over 5 years. The proprietary data, DNA library, protocols, research and methods are classified as trade secrets in our industry. The Company will amortize the trade secrets over an estimated useful life of 15 years.

The stock price on August 22, 2018 was $0.92 per share, indicating a purchase price of $14,260,000 requiring allocation:

The financial statements presented above reflect the increase of this minority interest investment. The 400,000 units acquired in this acquisition increased our ownership less than 1%, and as such, the Company has not acquired more than 50% of Juneau, in total, as of March 31, 2019. The $440,000 allocated to Investment in Minority Interest was offset in the period of acquisition by our share of the losses incurred by Juneau for the quarter ended September 30, 2018.

On August 22, 2018, the Company entered into an agreement captioned “Asset Purchase Agreement” (the “Purchase Agreement”) with Taueret Laboratories, LLC and its members. Under the terms of the Purchase Agreement, the Company issued warrants exercisable for 16,500,000 shares of the Company’s common stock. The warrants were exercisable at fair market value of the Company’s common stock on the closing date. In consideration for the warrants, the Company acquired (i) approximately 1,000 degenerative disc disease related DNA samples, related family records, relevant clinical records (including approximately 600 affected probands) and 800 ancestry matched control samples, (ii) whole exome sequencing data on approximately 300 degenerative disc disease samples, over 800 local controls, and published reference populations, together with initial analysis of the markers, (iii) project plan, study paperwork, promotional study and materials used in the research study, (iv) exclusive use of a DNA biobank that has a collection of over 300,000 samples for multiple diseases that the Company may target, (v) the remaining interest in database records for over 31,900,000 individuals for use in genetics research, and (vi) other assets.

The warrants issued are for proprietary data and methods that are otherwise a trade secret in our industry. Therefore, the Company determined to classify the assets purchased as trade secrets with a 15-year life. The Company used a Black Scholes calculation to determine valuation of the warrants ~~to assign~~of $13,860,000. As the purchase ~~price~~ of ~~$13,860,000.~~

the trade secrets with common stock warrants resulted in a difference between book and tax basis in the trade secrets, the carrying amount of the trade secrets was increased to $18,480,000 to reflect the deferred tax liability of $4,620,000 assumed in the transaction.

The fair value of the warrants was determined using the following inputs to the Black Scholes model:

Expected volatility was calculated from the historical volatility of the Company’s common stock.

On December 19, 2018 the Company executed a merger with the shareholders of Regenerative Medical Technologies, Inc. (“RMT”), a Utah corporation. The Company acquired RMT for 10,000,000 shares of common stock. RMT holds various assets including (i) models, methods and protocols for collection of birthing tissue and DNA samples, (ii) patient registry models, methods and protocols to collect clinical outcomes and electronic medical records, and (iii) designs and methodologies relating to many initiatives that are complementary to anticipated product offerings and ongoing research, and (iv) other assets.

The fair value of consideration paid was determined based on our stock price of $0.92 on the date of ~~acquisition of $0.92 indicated fair value of common stock paid as consideration of $9,200,000.~~acquisition. In addition, the Company recognized a deferred tax liability of $3,066,667 related to the differences between book and tax basis arising from the acquisition, resulting in a total purchase price of ~~$12,066,667.~~$12,266,667. The Company determined that the assets acquired qualify for treatment as trade secrets within industry. The trade secrets will be amortized over an estimated useful life of 10 years.

~~Aggregate amortization expense for the 3 and 9 months ended March 31, 2019 was $289,473, and $385,965respectively.~~

~~Estimated amortization expense for the assets consists of the following as of March 31, 2019:~~

On March 22, 2019, the Company completed the acquisition of Taueret Laboratories, LLC (“Taueret”) pursuant to the Securities Purchase Agreement (as amended, the “Purchase Agreement”), dated January 1, 2019. Pursuant to the terms of the Purchase Agreement, the Company acquired all of the outstanding units of Taueret. The Company and its affiliates plan to use Taueret’s CLIA-certified laboratory to perform diagnostic testing services.

The Purchase Agreement also specifies that the Company may, at its sole discretion, put certain patents related to the diagnosis and treatment of Preeclampsia (the “Preeclampsia IP”) back to the members of Taueret at any time prior to December 31, 2020 (the “Preeclampsia Option”). On ~~June 30,~~December 31, 2020, an additional payment of $8,547,000 in cash will become due if the Company has not exercised the Preeclampsia Option. After considering the relevant accounting guidance, we determined that the Preeclampsia Option was not part of the business combination with Taueret, because the Preeclampsia Option was included in the Purchase Agreement ~~and structured~~ primarily to benefit the acquirer.

The Company acquired Taueret and the Preeclampsia Option for total consideration of $931,817, net of cash acquired of $85,964. The consideration was paid as 552,995 shares of the Company’s common stock. The common stock was valued at the closing price on the date of the closing of the merger, adjusted for a 20% discount for lack of marketability related to a contractually stipulated lockup provision with a period of one year. The consideration was allocated between the business combination and the Preeclampsia Option on a relative fair value basis with $917,511 allocated to the business combination and $100,000allocated to the Preeclampsia Option. The Preeclampsia Option was recorded in intangible assets and will be amortized on a straight-line basis over the period the option is exercisable.

Total consideration transferred was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date.

Management estimated the fair value of tangible and intangible assets and liabilities in accordance with the applicable accounting guidance for business combinations and utilized the services of third-party valuation consultants. These amounts are provisional and may be adjusted during the measurement period, which expires no later than one year from the acquisition date, if new information is obtained that, if known, would have affected the amounts recognized as of the acquisition ~~date:~~date.

The Company acquired intangible assets that consisted of an internally developed laboratory information management system which had an estimated fair value of $239,000, CLIA regulatory licenses with a fair value of $295,000, and customer relationships with a fair value of $16,000. The fair value of the software was determined using the replacement cost method. The fair value of the CLIA licenses were estimated using the excess earnings method. The estimated net cash flows were discounted using a discount rate of 22%, which is based on the estimated internal rate of return for the acquisition and represents the rate that market participants might use to value the intangible assets. The projected cash flows were based on key assumptions such as estimates of revenues and operating profits. The Company will amortize the intangible assets on a straight-line basis over their estimated useful lives of 15 years for the CLIA license and 5 years for the software and customer relationships. This amortization is deductible for income tax purposes.

Any excess of fair value of acquired net assets over the purchase price (negative goodwill) has been recognized as a gain in the period the acquisition was completed. We have reassessed whether all acquired assets and assumed liabilities have been identified and recognized and performed remeasurements to verify that the consideration paid, assets acquired, and liabilities assumed have been properly valued. The remaining excess has been recognized as a gain in other income and expense in the consolidated statement of operations. The bargain purchase gain partly resulted from the allocation of the total consideration between the business combination and the Preeclampsia Option. We also believe we were able to negotiate a bargain price due to the desire of the sellers to induce the Company to purchase the Preeclampsia Option contemporaneously with the business combination.

The ~~unaudited pro-forma results presented below include the effects~~composition of ~~the Taueret acquisition~~inventories is as if it had been consummated as of July 1, 2017, with adjustments to give effect to pro forma events that are directly attributable to the acquisition which includes adjustments related to the amortization of acquired intangible assets and elimination of transactions related to laboratory services between the Company and Taueret. These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operation of the combined company would have been if the acquisition had occurred at the beginning of the period presented nor are they indicative of future results of operations and are not necessarily indicative of results that might have been achieved had the acquisition been consummated as of July 1, 2017.follows:

To complete the purchase transaction, the Company incurred immaterial acquisition costs, which were recorded as general and administrative expense. The post-acquisition operations of Taueret did not materially impact the consolidated statement of operations for the 3 and 9 month periods ended March 31, 2019.

Depreciation expense for the 3three month periods ended ~~March~~December 31, 2019 and 2018 was ~~$149,776and $40,960,~~$546,714and $125,880, respectively. Depreciation expense for the 9six month periods ended ~~March~~December 31, 2019 and 2018 was ~~$358,729 and $64,719,~~$928,601and $209,014, respectively.

Intangible assets primarily consist of amortizable ~~assets of~~ purchased licenses, patents, and trade secrets. The following summarizes the amounts reported as intangible assets:



	Carrying Amount		Accumulated Amortization			Net	Weighted Average Remaining Amortization Period (Years)
At June 30, 2019:
Licenses	$	21,337,981	$	(3,275,666)	$	18,062,315	9.0
Patents		9,750,000		(2,899,510)		6,850,490	9.0
Trade Secrets		56,675,936		(11,339,601)		45,336,335	8.9
Other		411,000		(27,069)		383,931	11.0
Goodwill		5,254,451		N/A		5,254,451	N/A
Total intangible assets	$	93,429,368	$	(17,541,846)	$	75,887,522	9.0

Estimated future amortization expense related to intangible assets consists of the following as of December 31, 2019:

Total amortization expense for the 3three months ended ~~March~~December 31, 2019 and ~~March 31,~~ 2018 was ~~$2,224,230~~$2,228,359 and ~~$1,107,302respectively. Amortization~~$1,909,480respectively. Total amortization expense for 9the six months ended ~~March~~December 31, 2019 and ~~March 31,~~ 2018 was ~~$6,075,090~~$4,456,717 and ~~$3,321,907respectively. We did not record any impairment charges during the 9 months ended March 31, 2019 and March 31, 2018.~~$3,492,069respectively.

On December 28, 2016, Predictive Therapeutics, LLC and Juneau amended and restated the license agreement dated July 9, 2015. The amended license fees associated with this agreement required minimum monthly payments of $100,000 through April 2017. Beginning in May 2017, minimum monthly payments of $120,000 were required through August 2017, and subsequent payments of $500,000 for the next four consecutive months. The term of the license is equal to the life of the licensed patents.

An additional license fee of $2,000,000 is due and payable once the Company has received profits of $25,000,000 related to the intellectual property licensed under the agreement.

Upon first commercial sale of the licensed assay, the Company will issue to Juneau common shares with a market value of $2,500,000. Juneau is entitled to a royalty equal to 50% of net sales, adjusted to exclude certain costs and fees, and subject to certain minimums.

In March of 2018, the Company’s licenses with Juneau were amended to reduce the royalty rate and expand the scope of the licenses to include the entire field of endometriosis and pelvic ~~pain in consideration for the issuance of~~pain. The Company issued 1,000,000 ~~shares of the Company’s common stock and warrants exercisable for 14,000,000~~ shares of common stock atand 14,000,000 warrants with an exercise price of $0.80 per ~~share.~~share as consideration.

In December of 2018 the Company and Juneau agreed to renegotiate the price paid for the license. The warrants issued initially for this license agreement were cancelled, and a new ~~round of~~ warrants ~~was~~were issued with an increased exercise price of $0.90 per share, resulting in a decrease in the value assigned to the license agreement of ~~approximately~~ $4,449,211. The replacement of the warrants resulted in an additional deferred tax liability of $290,263, resulting in a net decrease in the carrying value of the licenses of $4,158,948. There was an associated adjustment to amortization expense. The fair value of the replacement warrants were determined using the following inputs to the Black Scholes model:

In addition to the license for the commercialization of assays and related services for the prognosis and monitoring of endometriosis in the infertility market, the Company entered into a license agreement with Juneau to use the assay as a companion diagnostic test in conjunction with endometriosis therapeutics that may be developed from intellectual property owned by the Company and Juneau. ~~This license agreement was amended and restated on December 28, 2016.~~

~~The agreement initially required a $250,000 license fee which was paid during 2013 and 2014. A subsequent milestone payment of 250,000 shares of Company stock was paid to Juneau on October 19, 2016.~~ Once FDA approval is granted on any companion diagnostic test, a final milestone payment of $250,000 is due.

The agreement requires a 2% royalty to be paid to Juneau on the sale of patented therapeutic products specifically covered by the agreement.

The Company ~~has elected to capitalize the periodic payments when paid, through the development stage, and~~ amortizes the licenses over the life of the underlying patents.

On September 22, 2015 certain patents were acquired in exchange for 541,325 Class A Units of Predictive Therapeutics, LLC. There were no contingencies or royalty obligations associated with the purchase of the patents. These patents were recorded on Predictive Therapeutics, LLC’s books at a purchase price of $9,750,000.

The Company’s investment in Juneau is accounted for under the equity ~~method.~~method and included in the Diagnostics and Therapeutics segment. The following table summarizes the investment:



	As of March 31, 2019		As of June 30, 2018		As of December 31, 2019		As of June 30, 2019

Carrying amount	$	51,774,200	$	55,392,622	$	35,329,167	$	51,717,719

Ownership percentage		48.5%		49.6%		48.3%		48.4%

~~On November 6, 2015, the Company acquired 2,792,292 units of Juneau through its acquisition of LifeCode Genetics, Inc. (See Note 2).~~

On August 3, 2017, the Company lent Juneau $300,000 pursuant to an unsecured loan agreement. The loan was convertible into Class A Units of Juneau at the rate of $1.00 per unit. On August 8, 2017, the principal was increased. On December 31, 2017, the principal and accrued interest in the amount of $3,685,308 was converted into 3,685,308 Class A Units.

In December 2017, the Company and Juneau reached verbal agreement on a stock subscription arrangement. The Company agreed to purchase 15,681,818 Class A Units of Juneau at a price of $1.10 per unit. Subsequent amendments reduced the number of units purchased to 13,000,000. In early 2018, the terms were finalized and memorialized in a subscription agreement executed by the Company and Juneau. Under the terms of the agreement (as amended), the subscription is to be paid in installments through ~~March 31,~~September 30, 2021. The Company has the ~~right~~option to ~~stop funding~~cancel the ~~subscription at any time at its sole discretion. Should the Company stop funding the subscription,~~subscription. If this option is exercised, any units of Juneau issued to the Company but not paid will be cancelled. The agreement includes certain restrictions on the use of funds provided under the subscription agreement and grants the Company the right to appoint a minority of Juneau’s Board of Managers. Should the Company elect not to fund the entire subscription, ~~Juneau’s~~Juneau's obligations to the Company that are not related to the license agreements (see Note 5)6) will terminate.

On ~~October 8, 2018, Juneau and~~September 25, 2019, the Company ~~agreed~~and Juneau executed an amendment to ~~reduce~~ the ~~number~~subscription agreement. In addition, a receivable due from Juneau in the amount of ~~units purchased~~$184,443 was applied to the subscription payable balance.

The schedule of payments as of December 31, 2019 under the ~~subscription~~amended agreement ~~from 15,681,818 to 14,000,000. As a result, 1,681,818 issued but unpaid units were cancelled.~~

On March 15, 2019, Juneau and the Company agreed to further reduce the number of units purchased under the subscription agreement from 14,000,000 to 13,000,000. As a result, 1,000,000 issued but unpaid units were cancelled.

~~Amounts provisionally due under the subscription agreement are~~is as follows:

Summarized financial information for the Company’s equity method investee as of and for its fiscal year end is presented in the following tables:

The Company reviews its equity method investment on a quarterly basis to determine whether a triggering event has occurred that could necessitate an impairment test. During the three months ended December 31, 2019, the Company’s stock price declined from $1.67 per share to $0.73 per share, which was determined to qualify as a triggering event for impairment tests of our reporting units, intangible assets, and equity method investments.

We engaged a third-party valuation firm to assist us in determining whether the carrying value of our equity method investment had fallen below the carrying value. The valuation was performed using a combination of the cost approach, the income approach, and calibration of the fair values of the Company’s operating segments and equity method investment to the Company’s overall market capitalization. These valuation approaches use inputs that qualify as Level 3 in the fair value hierarchy. As a result of the valuation, it was determined that the fair value of our equity method investment had fallen to $35,329,167, necessitating an impairment charge of $15,932,016. The total impairment charge is included in Loss on equity method investment in the condensed consolidated statement of operations.

The impairment was determined to be other than temporary based on the magnitude of the decline in fair value.


		As of		As of		As of		As of
		March 31,		June 30,		December 31,		June 30,
		2019		2018		2019		2019
Employee compensation and benefits	$	397,032	$	262,255	$	888,911	$	816,451
Other		1,158,678		772,650		1,042,907		1,041,320
Total accrued liabilities	$	1,555,710	$	1,034,905	$	1,931,818	$	1,857,771

From June to December 2019, the Company issued unsecured promissory notes to six accredited investors in the total amount of $9,360,000. The promissory notes bear 12% simple interest and mature on the two-year anniversary of each note. The notes may be repaid at any time.

In September 2019, the Company and the accredited investor entered into a Revolving Loan Agreement whereby an accredited investor agreed to lend the Company up to an additional $3,000,000. Amounts drawn under the revolving loan will be charged interest at a rate of 12% and may be repaid at any time. There was $720,000 outstanding under the Revolving Loan Agreement as of December 31, 2019. All amounts outstanding under the revolving loan are due upon the expiration of the revolving loan facility on September 30, 2021.

As of December 31, 2019, unsecured promissory notes bearing 12% interest with a face value of $9,360,000 remain outstanding. The notes mature from June to December 2021. Notes with a face value of $400,000 mature during the fiscal year ended June 30, 2021, with the remainder maturing during the fiscal year ended June 30, 2022.

The fair value of the Company's outstanding debt obligations as of December 31, 2019 was $10,080,000, which was determined based on a discounted cash flow model using an estimated market rate of interest of 12%, which is classified as Level 2 within the fair value hierarchy.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The Tax Act made broad and complex changes to the U.S. tax code that affect the Company, including, but not limited to (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) creating the base erosion anti-abuse tax (BEAT), a new minimum tax; (6) creating a new limitation on deductible interest expense; (7) revising the rules that limit the deductibility of compensation to certain highly compensated executives, and (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

In connection with the Company’s analysis of the impact of the Tax Act, the Company recorded a discrete income tax benefit during the quarter ended December 31, 2017 of $2,436,475. This consisted of a net benefit for the corporate rate reduction due to the revaluing of net deferred tax liabilities as a result of the reduction in the federal corporate tax rates. The Company’s net deferred tax liabilities represent temporary differences between the book bases of assets which are greater than their tax bases. Upon the reversal of those temporary differences, the future tax impact will be based on the lower federal corporate tax rate enacted by the Tax Act.

In addition to the discrete benefit recorded during the quarter ended December 31, 2017 for the provisional estimated impact on the Company’s net deferred tax liabilities, the lower federal corporate tax rate reduced the Company’s estimated annual effective tax rate which was applied to year to date operating results in accordance with the interim accounting guidelines.

In order to determine the Company’s quarterly provision for income taxes, the Company used an estimated annual effective tax rate that is based on expected annual income and applicable federal and state tax rates. The Tax Cuts and Jobs Act ~~reduces~~reduced the federal corporate tax rate to 21% in the fiscal year ended June 30, ~~2018.~~2019. Section 15 of the Internal Revenue Code ~~Stipulates~~stipulates that the Company’s fiscal year ended June 30, ~~2018,~~2019, had a blended corporate tax rate of 28%, which is based on the applicable tax rates before and after the Tax Act and the number of days in the year. For the fiscal ~~year~~years ending after June 30, 2019, the Company’s federal corporate tax rate is 21%. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rate from quarter to quarter.

The Company recognized income tax benefits of ~~$1,215,312~~$4,239,780 and ~~$1,579,463~~$713,526 for the ~~3 month~~three-month periods ended ~~March~~December 31, 2019 and ~~2018.~~2018, respectively. The Company recognized income tax benefits of ~~$2,541,290~~$9,448,195 and ~~$4,905,699~~$1,325,978 for the 9six month periods ended ~~March~~December 31, 2019 and ~~2018.~~2018, respectively. The Company’s recognized effective tax rate differs from the U.S. federal statutory rate for the three and six months ended December 31, 2019 primarily due to state income taxes, share based compensation, excess tax benefits arising from the ~~effect~~exercise of commons stock warrants during the ~~change~~period, and tax benefits resulting from the impairment of our equity method investment (see Note 7), as well as an increase in the ~~federal~~valuation allowance on deferred tax assets. The Company’s recognized effective tax rate differs from the ~~impact of bargain purchase gain associated with our acquisition of Taueret Laboratories, LLC (see Note 2),~~U.S. federal statutory rate for the three and ~~the impact of federal tax credits.~~six months ended December 31, 2018 primarily due to state income taxes and share based compensation.

~~As of March 31, 2019, and June 30, 2018, the~~The Company ~~had 272,530,397and 247,624,069 shares~~has issued ~~and outstanding or pending issuance under contractual obligation.~~

~~On March 22, 2019, the Company issued 552,995shares of~~various warrants exercisable for our common stock ~~to acquire Taueret Laboratories, LLC~~outside of the 2015 Stock Option Plan (see Note 2)13). The warrants were issued to raise capital, as compensation for acquisitions of intellectual property, and as compensation for services.

~~The Company issued 10,000,000 shares of its common stock on December 19, 2018 to acquire Regenerative Medical Technologies, Inc. (see Note 2).~~

~~The Company issued 15,500,000 shares of its common stock on August 22, 2018 to acquire Inception Dx, LLC (see Note 2).~~

~~On August 7, 2018 the Company issued 50,000 shares of common stock for services related to the HCT/P business.~~

~~On August 30, 2018,~~In September 2019, the Company entered into an agreement ~~captioned Consulting Agreement~~ with ~~Avira Financial, LLC whereby Avira will be performing various business~~a consultant for research and development ~~marketing and consulting services for the Company.~~services. In consideration for these services, the Company granted warrants to ~~Avira~~the consultant exercisable for ~~5,250,000~~1,250,000 shares of the Company’s common stock with a strike price equal to the closing price of the Company’s common stock on the date of grant. Warrants to acquire ~~250,000~~625,000 shares vested upon ~~issuance~~issuance. Of the remaining warrants, 375,000 vest on March 1, 2020 and ~~the remainder of the warrants~~225,000 vest ~~in three equal annual installments, subject to accelerated vesting upon the occurrence of certain events.~~on September 1, 2020. The warrants expire ~~on the earlier of (i) the five year anniversary of~~ten years from the date of issuance.

On July 16, 2019 and August 1, 2019, a total of 11,000,000 common stock warrants issued to FlagshipSailsRx, LLC, our former sales and marketing contractor, were exercised pursuant to a cashless exercise feature. The cashless exercise resulted in the issuance ~~or (ii)~~of 9,172,157 shares of common stock and the ~~date~~cancellation of 1,827,843 warrants as consideration for the ~~Consulting Agreement is terminated.~~exercise price.

The following is a summary of warrant activity from June 30, ~~2018~~2019 through ~~March~~December 31, 2019:

Number
of

Weighted
Average

Weighted Average
Remaining

Warrants

Exercise Price

Contractual Life
Warrants:

Outstanding June 30, 2018
    42,268,520

$0.50

                                            3.9

Granted
    35,750,000

                              0.91

                                            4.6

Exercised
    -

    -

  -

Forfeited/Cancelled
  (14,000,000)

                              0.80

                                            4.3

Outstanding March 31, 2019
    64,018,520

                              0.73

                                            4.2

The Company recognizes expense for warrants issued for services that are subject to graded vesting on a straight-line basis. Share based compensation expense related to warrants issued for services for the three months ended December 31, 2019 and 2018 was $1,361,172 and $358,333, respectively. Share based compensation expense related to warrants issued for services for the six months ended December 31, 2019 and 2018 was $3,251,384 and $944,778, respectively.

As of December 31, 2019, unrecognized compensation cost related to warrants issued for services was $4,010,755 and is expected to be recognized over a weighted average period of 1.36 years.

The computation of weighted average shares outstanding and the basic and diluted earnings per common share for the following periods consisted of the following:

Potentially dilutive securities ~~not included in~~that would be excluded from the calculation of diluted net loss per common share because to ~~do so~~include them would be anti-dilutive are as follows:

~~The number of potentially dilutive shares presented in the table above was calculated using the treasury stock method.~~

In 2015, a Stock Option Plan was adopted to advance the interests of the Company and its shareholders by helping the Company obtain and retain the services of employees, officers, consultants, independent contractors and directors, upon whose judgment, initiative and efforts the Company is substantially dependent, and to provide those persons with further incentives to advance the interests of the Company. Eligible participants include employees, officers, certain consultants, or directors of the Company or its subsidiaries.

The number of shares, terms, and vesting periods are determined by the Company’s Board of Directors or a committee thereof on an award-by-award basis. Awards provided under the Plan generally vest in three equal annual installments. The maximum term of options issued under the plan is 10 years from the date of grant. The aggregate number of shares of Option Stock that may be issued pursuant to the exercise of Options granted under this Plan will not exceed fifteen percent (15%) of the total outstanding shares of the Company's common ~~stock, par value $.001 per share.~~

~~On March 7, 2019,~~stock. The Company ~~entered into an agreement with a consultant for business development services. In consideration for these services, the Company granted options to the consultant exercisable for 3,500,000 shares~~settles exercises of ~~the Company’s common~~ stock with a strike price equal to the closing price of the Company’s common stock on the date of grant. Options to acquire 1,000,000 shares vested upon issuance, and 750,000 vest upon the Company’s listing on a major stock exchange. The remaining 1,750,000 options vest in five equal quarterly tranches of 350,000 options starting on September 1, 2019. The warrants expire five years from the date of issuance.option awards by issuing new shares. Forfeitures are recognized as they occur.

A summary of option activity is as follows for the ~~fiscal period~~six months ended ~~March~~December 31, ~~2019 and the fiscal year ended June 30, 2018:~~2019:

March 31, 2019

June 30, 2018

Number
of
shares

Weighted average exercise price

Number
of
shares

Weighted
average exercise price
Options outstanding at beginning of period
5,613,500
$
0.80

    300,000
$
1.00
Options granted
7,070,000

1.17

5,313,500

0.79
Less:

Options exercised
   (3,333)

.94

    -

   -

Options canceled or expired
  (1,092,667)

.93

  -

   -
Options outstanding at end of period
  11,587,500
$
   1.02

       5,613,500
$
   0.80
Options exercisable at end of period
6,103,125
$
0.93

    3,008,000
$
  0.75

Share based compensation expense related to options issued under the 2015 Plan for the ~~3 and 9 month periods~~three months ended ~~March~~December 31, 2019 and 2018 was ~~$2,634,969~~$3,272,897 and ~~$4,238,790,~~$652,172, respectively. Share based compensation expense related to options issued under the 2015 Plan for the 3six months ended December 31, 2019 and ~~9 month periods ended March 31,~~ 2018 was ~~$2,919,232~~$6,377,285 and ~~$8,369,120,~~$1,038,076, respectively. ~~Share based compensation~~

The Company recognizes expense ~~is included in selling, general, and administrative expense~~for awards subject to graded vesting on ~~the consolidated statement of operations.~~

a straight-line basis. As of ~~March~~December 31, 2019, there was ~~$8,244,839 of~~$27,462,272of total unrecognized share-based compensation expense related to stock options ~~and warrants~~issued under the 2015 Stock Option Plan that will be recognized over a weighted-average period of ~~2.2~~2.43 years.

The Company has commitments under license agreements which are described in Note 5.6.

~~The table below presents the future minimum lease payments under operating and capital leases:~~Leases

~~Operating lease payments primarily relate to~~On October 10, 2019, substantially all of the Company’s ~~lease~~operating leases of office and laboratory space ~~expiring in October 2019. The Company has the option~~were amended to extend the ~~lease~~expiration dates of the leases to September 30, 2021. The Company also leased an additional 6,711 square feet of office and storage space ~~by one year from the expiration date.~~that commenced on November 1, 2019 and expires on September 30, 2021.

In March 2019, the Company entered into ~~capital~~finance leases of laboratory equipment. The validation process for the leased equipment was completed and ~~related consumables.~~payments commenced in October 2019. The leases expire in ~~March~~September 2022, at which time the Company has the option to purchase the leased equipment for one dollar.

~~Rent~~The table below presents the future minimum lease payments under operating and finance leases:

Lease expense under operating leases was ~~$169,044and $18,683for~~$108,201 and $159,979for the ~~3 months~~three and six month periods ended December 31, 2018, respectively.

In March 2019, in connection with the lease of laboratory equipment described above, the Company agreed to purchase a fixed quantity of the consumables used by the equipment for a total of $1,386,710. The Company is obligated to pay for the consumables in twelve fixed monthly installments beginning in October 2019. At December 31, 2019, the Company had taken delivery of consumables worth $248,724 in excess of the installment amounts paid. The amount due for goods that have been delivered is included in accrued liabilities on the consolidated balance sheet. Remaining payments due under the purchase commitment total $693,355 during the year ending June 30, 2020 and $346,477 during the year ending June 30, 2021.

On or about July 13, 2018, ~~respectively. Rent expense under operating leases~~RTJ, LLC and two of its principals filed a lawsuit against Predictive Therapeutics LLC, Predictive Biotech, Inc., both subsidiaries of Predictive Technology Group, Inc., and Jack Turner, Jr., an employee of Predictive Biotech, Inc. The plaintiffs had acted in a distributor capacity. The relationship was ~~$328,124~~terminated. Plaintiffs are alleging breach of contract, promissory estoppel, unjust enrichment, fraud, breach of fiduciary duty, defamation, false light, and ~~$56,228~~tortious interference. Based on the information available to us, we do not believe any of the RTJ proceedings will have a material adverse effect on our business, results of operations, financial position or liquidity. Further, we deny the allegations in the complaint, have not discovered any evidence of wrongdoing with respect to the allegations and will vigorously defend against these allegations.

On or about May 1, 2019, Surgenex, LLC and one of its principals filed a lawsuit against Predictive Therapeutics LLC, Predictive Biotech, Inc., both subsidiaries of Predictive Technology Group, Inc., and Doug Schmid, an employee of Predictive Biotech, Inc. In 2014 Surgenex contracted with Utah Cord Bank, Inc., a former employer of Doug Schmid, to assist Surgenex in the doing work relating to allograft tissue. Schmid was later hired by Predictive Biotech, Inc. In connection with Schmid’s employment with Predictive Biotech, Surgenex has filed a lawsuit alleging unjust enrichment, conspiracy, conversion, tortious interference with contractual and business relations, violations of trade secrets act, and other claims. Based on the information available to us, we do not believe the Surgenex proceedings will have a material adverse effect on our business, results of operations, financial position or liquidity. Further, we deny the allegations in the complaint, have not discovered any evidence of wrongdoing with respect to the allegations and will vigorously defend against these allegations.

On or about July 12, 2019, Predictive Technology Group, Inc. and Predictive Therapeutics, LLC, a subsidiary of Predictive Technology Group, Inc. filed a lawsuit against Michael Schramm. Schramm had previously acted as our patent agent. While acting as our patent agent, Schramm entered into an agreement to sell us certain patents and patent applications in consideration for equity securities. Schramm represented that he owned all right, title and interest in and to the ~~9 months ended March~~intellectual property. We were subsequently advised by the patent counsel who replaced Schramm that Schramm’s representation was false. The Company raised these concerns with Schramm, who did not provide satisfactory evidence addressing the concerns of our current patent counsel. We sued Schramm for breach of contract, conversion and on other legal theories and are seeking, among other things, rescission of the purchase and sale transaction. Schramm filed a counterclaim against us and Bradley C. Robinson, our Chief Executive Officer and Transfer Online, Inc., our transfer agent. Schramm is alleging he did not make any false representations. He is alleging, among other things, that various parties involved in the transaction committed breach of contract, conversion, violations of Nevada state law for failure to transfer securities, breach of fiduciary duty, tortious interference, and civil conspiracy. Based on the information available to us, we do not believe the Schramm proceedings will have a material adverse effect on our business, results of operations, financial position or liquidity. Further, we deny the allegations in the counterclaim, have not discovered any evidence of wrongdoing with respect to the allegations in the counterclaim and will vigorously prosecute our claims against Schramm.

As of December 31, 2019, we did not record a liability related to these matters as it was determined that an unfavorable resolution is either not currently probable or that an amount or relevant range is not reasonably estimable, or both. However, litigation is inherently unpredictable and ~~2018, respectively.~~ it is possible that losses may occur. Any unfavorable resolution of any of these matters could materially affect our consolidated financial position, cash flows, or results of operations. All legal costs associated with litigation are expensed as incurred.

Management has evaluated subsequent events through ~~May 20, 2019,~~February 14, 2020, the date on which the financial statements were available to be issued.

~~-28-~~
On December 31, 2019, four accredited investors agreed in substance to accept repayment in equity shares for promissory notes with a face value of $8,420,000 and the $720,000 outstanding under of the Revolving Loan Agreement, as well as $311,918 in accrued interest thereon. For accounting purposes, the debt was not considered extinguished until the Company issued the shares in after the balance sheet date. Subsequent to the balance sheet date, the debt was extinguished in full by issuing 12,947,833 shares of the Company's common stock based on the closing market price on December 31, 2019 of $0.73 per share.

On January 29, 2020, the Company sold 500,000 shares of our common stock, par value $0.001, to an accredited investor at a price of $0.96 per share.

On February 10, 2020, the Company and Juneau Biosciences, LLC, its equity method investee, executed an amendment to the agreement captioned “Third Amended and Restated Subscription Agreement.” Under the terms of the agreement, the Company issued common stock, par value $0.001, with a value of $2,430,000 (the “Equity Payment”) based on the closing market price on the agreement date that was applied against the subscription payable. The amendment also changed the schedule of cash payments due under the subscription agreement to purchase units of Juneau. The pro forma schedule of payments as of December 31, 2019 under the amended agreement is as follows, with the Equity Payment included in the amount shown for the fiscal year ended June 30, 2020:

In February 2020, the Company borrowed $200,000 under its Revolving Loan Agreement with an accredited investor. The Company also borrowed an additional $450,000 under a promissory note with a second accredited investor. The promissory note bears 12% simple interest and matures on the two-year anniversary of the note. The note may be repaid at any time.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K as of and for the fiscal year ended June 30, 2019. Unless otherwise noted, all of the financial information in this Report is consolidated financial information for the Company.

Predictive Technology Group, Inc., a Salt Lake City, UT life sciences company, is a leader in the use of data analytics for disease identification and subsequent therapeutic intervention through unique novel gene-based diagnostics, biotechnology treatments and companion therapeutics. Through its’ wholly-owned subsidiaries, Predictive Biotech, Predictive Laboratories, and Predictive Therapeutics, the company focuses on clinical categories such as: Endometriosis, ~~Preeclampsia,~~ Degenerative Disc Disease and Human Cell and Tissue ~~Products.~~Products (“HCT/P”). In addition to Predictive Biotech’s efforts to advance regenerative medicine, Predictive Laboratories is committed to assisting women in overcoming the devastating consequences of endometriosis via appropriate early-stage diagnosis and subsequent treatment. During the three and six months ended ~~March~~December 31, 2019 we reported total revenues of ~~$11,295,618~~$7,336,640 and $15,595,898, respectively. We reported net ~~loss~~losses attributable to common shareholders of ~~$3,708,911~~$26,002,669 and $33,867,276, resulting in ~~a $(0.01) loss~~net losses per ~~share.~~common share of $(0.09) and $(0.12), respectively. During the ~~nine~~three and six months ended ~~March~~December 31, ~~2019,~~2018 we reported total revenues of ~~$30,046,456~~$10,687,036 and $18,750,838, respectively. We reported net ~~loss~~losses attributable to common shareholders of ~~$8,042,731~~$2,329,438 and $4,333,820 resulting in ~~a $(0.03) loss~~net losses per ~~share.~~common share of $(0.01) and $(0.02), respectively.

Our business units have been aligned with how the Chief Operating Decision Maker reviews performance and makes decisions in managing the Company. The business units have been aggregated into two reportable segments: Human Cell and Tissues Products (HCT/Ps) and diagnostics and therapeutics. Predictive Biotech’s HCT/Ps are processed in our FDA registered lab. Our minimally manipulated tissue products are prepared utilizing proprietary extraction methods that reduce the loss of important scaffolding, growth factor and general cytokines and are intended for homologous use. Predictive Laboratory’s diagnostics and therapeutics uses data analytics for disease identification and subsequent therapeutic intervention through unique novel gene-based diagnostics, biotechnology treatments and companion therapeutics.

~~On March 22, 2019, we completed the acquisition of Taueret Laboratories, LLC, a provider of genetic testing~~Diagnostics and DNA analysis services pursuant to a Securities Purchase Agreement. We believe that the acquisition of Taueret’s CAP/CLIA accredited laboratory will allow for faster entry into the high-growth women’s health testing market with proprietary commercial products.

On January ~~18,~~28, 2020, we announced a potential collaboration agreement with Atrin Pharmaceuticals LLC to develop molecular diagnostic tools to facilitate improved selection of cancer patients who would most benefit from treatment with DNA Damage and Response (DDR) inhibitors, including Atrin’s and other small molecule ATR inhibitors. Atrin and Predictive will jointly utilize Predictive Laboratories’ state-of-the-art sequencing capabilities and genomics expertise to identify cancer patients with specific molecular markers that predict the level of clinical response to Atrin’s, and other, targeted therapies. This is intended to improve patient outcomes as well as improve Atrin’s ability to successfully progress its product pipeline, and upon commercialization, improve on the treatments for women with cancer. Predictive, with its proprietary list of already identified genes and state-of-the-art sequencing capabilities, believes it is the ideal molecular diagnostic partner to help Atrin successfully advance their therapeutic pipeline through clinical development. The companies believe that this collaboration may become a ‘game changer’ in oncology, as treatment continues to progress towards individualized precision medicine. As Atrin advances multiple Investigational New Drug (IND) applications and progresses their lead product candidate ATRN-119 into a first-in-human clinical study this year, Predictive’s portfolio of genomic tests will help Atrin better identify cancer patient populations whose genetic profiles will likely have an optimal clinical response to Atrin’s proprietary anti-cancer therapeutics. The collaboration will help optimize the safety and clinical efficacy of Atrin’s targeted cancer therapeutics and other DDR drug candidates. Atrin will have access to Predictive’s proprietary GenDB databases and women’s health biobank to better understand the clinical spectrum of germline mutations in DDR pathways. The companies will also study common gynecologic disorders, such as endometriosis, associated with the development of cancers in affected patients. The goal of this collaboration is to develop actionable predictive molecular and companion diagnostics and therapeutics for these common disorders and related cancers.

On October 16, 2019, Kenneth Ward, M.D., Chief executive officer of Juneau Biosciences; Rakesh Chettier M.S., director of biostatistics of Predictive Laboratories; and Hans Albertsen, Ph.D., chief scientific officer of Juneau Biosciences, received the 2019 Endometriosis Special Interest Group (EndoSIG) Prize Paper in the “Best in Clinical/Population Science” category at the American Society for Reproductive Medicine (ASRM) 2019 Scientific Congress & Expo in Philadelphia. The scientific breakthroughs reported in these award-winning discoveries provide us with insights into new non-hormonal therapies. The team’s research is based on the genetic markers of endometriosis discovered by Juneau and Predictive scientists in recent years, and uncovers molecular pathways involved in the pathogenesis of endometriosis-induced lesions in women at risk for the disease. Dr. Ward, a board-certified physician in obstetrics and gynecology, perinatology, clinical genetics and molecular genetics, presented two scientific papers at the Annual ASRM meeting: a poster entitled, “Endometriosis risk allele in WNT4 may interact with rare mutations in HDAC2 gene” and an oral abstract entitled, “Somatic cancer driver mutations in endometriosis lesions contribute to secondary cancer risk.”

On October 14, 2019, we ~~signed~~launched the full U.S. market availability of ARTguide™ to evaluate the risk for endometriosis and other genetic causes of infertility in women. Endometriosis can be a debilitating disease for many women as it can cause severe pelvic pain, inflammation, adhesions to the fallopian tubes and uterus, and often, infertility. ARTguide can predict a patient’s risk of endometriosis early on so that women have a better understanding of their barriers to conception, and therefore their physician can create a more personalized infertility treatment plan. ARTguide is appropriate for all women considering use of ART to overcome difficulty conceiving or carrying a pregnancy.

On October 15, 2019, we entered into an agreement with ~~Houston Fertility Institute (HFI)~~CLSA Capital Markets Limited, a CITIC Securities Company, to ~~continue~~provide introductions to potential strategic partners and regulatory guidance to support the ~~clinical evidence~~launch of our proprietary genetic-based products into China’s (PRC) rapidly growing markets for women’s health and fertility. We anticipate introducing ARTguide™ among other fertility diagnostics to the Chinese market. In 2016 the National Health and Family Planning Commission of the PRC reported that 40 million Chinese couples were experiencing fertility issues. Similarly, the American Society for Reproductive Medicine (ASRM) reported in 2017 that an estimated 25% of Chinese women of childbearing age struggled with infertility issues. In 2018 the European Society of Human Reproduction and Embryology estimated that approximately 800,000 assisted reproductive technology (ART) cycles, such as in vitro fertilization (IVF), were being performed in China annually. Chinese women are driving the fertility markets both in China and medical tourism industries overseas. The global IVF market is expected to grow at an annual rate of 10.2% and to reach $36.2 billion by 2026. The U.S. Center for Disease Control reported that of the patients who sought fertility care in 2017, 284,385 ART cycles were performed resulting in 78,052 live born infants with ART accounting for 1.7% of all infants born in the U.S. annually.

In October 2019, we launched FertilityDX™, a comprehensive genetic testing service that identifies barriers to healthy pregnancy and birth, allowing doctors to tailor fertility treatments. The objective of FertilityDX™ is to provide couples considering ART with an understanding of the genetic and medical obstacles that may be affecting their fertility and provide doctors with genetically relevant information to help their patients have a healthy baby. FertilityDX™ provides information by evaluating three key areas: contributors to (or causes of) infertility, risks of pregnancy complications, and risks for serious genetic conditions in offspring. The test will be launched in select fertility clinics across the United States.

In August 2019, we collected over 2,500 DNA samples along with comprehensive medical records since acquiring our CLIA operations in March 2019. We broadened our research initiatives by acquiring new sample collections in chronic pain, pregnancy complications, autism, and both female and male infertility. Personalized medicine and the development of ~~the ARTguide genetic test for Reproductive Endocrinologists. A priority of the agreement~~new therapeutics are expected to play a critical role in human health. Access to high-quality biospecimens from our biobank will be important for furthering our biomedical and translational research, and ultimately its development of personalized molecular diagnostics and clinical therapies. Current sample collection efforts are designed to ~~establish clinical utility data demonstrating improved outcomes from the utilization~~strategically augment our existing library of ~~ARTguide for patients receiving fertility treatment.~~ over 300,000 DNA samples that we believe will produce valuable insights into future research and development projects.

On August 9, 2019, we ~~grew our~~launched PGxPLUS+™, a pharmacogenomic test ~~volume (PGxPLUS+) 1,393% compared~~panel being marketed to ~~the preceding quarter, during which the test was launched. The PGxPLUS+ test is currently being used to help physicians assess medication selection~~pain clinics for patients with chronic pain. ~~Additionally,~~PGxPLUS+™ evaluates genetic factors that play a major role in an individual’s response to medications. In parallel, we ~~launched ARTguide~~reached a milestone of enrolling 350 patients with chronic pain into ~~14 HFI clinics~~an Investigational Review Board-approved clinical study aimed at providing additional insight into the mechanisms of chronic pain and responses to ~~refine~~pain therapies. We are approaching chronic pain and the opioid crisis on multiple fronts. We have developed and in-licensed important prognostic DNA tests and novel treatments for osteoarthritis, lumbar disc disease, endometriosis, and other conditions causing chronic pain. In 2016, the Institute of Medicine estimated that up to one-third of the U.S. population lives with ongoing pain. Chronic pain is often triggered by one of these common conditions, and over time can develop into a chronic pain syndrome, which is a disease itself. The PGxPLUS+™ test ~~ordering and reporting processes.~~

evaluates 112 genetic variants across 38 genes that affect the metabolism of over 150 common medications, including pain medications. More than 90% of the population has one or more gene variants that affect the efficacy or safety of prescription drugs. Variation in drug metabolism is largely determined by an individual’s genetic profile, blood levels of a drug may vary up to 1,000-fold in similar patients taking identical doses of the same drug. Pharmacogenomics is the study of the role of our genome in drug responses.

On ~~March 16,~~July 29, 2019, we ~~presented a poster titled~~entered into an agreement with the Preeclampsia Foundation to expand the study of genetic factors associated with preeclampsia. The ~~Genetic Architecture~~study will advance the Preeclampsia Foundation’s database of ~~Endometriosis~~ ~~at the Society for Reproductive Investigation (SRI) meeting. This study demonstrated the ability of~~collected preeclampsia medical information and will be utilized by Predictive Laboratories to develop a proprietary ~~genetic~~ test ~~(ENDORisk) to segregate patients with endometriosis from those without~~for the early detection of women at risk for preeclampsia. Preeclampsia affects 5-8%, or approximately 300,000, pregnancies every year in the ~~Caucasian population with~~United States, sometimes causing severe adverse maternal and fetal outcomes, including organ failure, massive blood loss, permanent disability or even death. Globally, preeclampsia is a ~~high degree~~leading cause of ~~sensitivity (Area Under~~pregnancy complications, preterm births and related disabilities. The deaths of approximately 76,000 mothers and 500,000 babies annually are attributable to preeclampsia. Healthcare providers, even in medically advanced countries, are hampered by imprecise diagnostic tools. The Preeclampsia Registry, a key program of the ~~ROC Curve = 0.91). The mean genetic risk score~~Preeclampsia Foundation’s research mission, is a patient registry that collects paired medical information and biological samples. Using established Institutional Review Board-approved protocols, we and the Preeclampsia Foundation will request samples from more than 2,500 existing and new registry participants for ~~endometriosis was 1.6~~sequencing analysis. We have been granted a period of exclusive access to research data resulting from these new samples enrolled in the ~~general population versus 5.3 in endometriosis patients.~~Preeclampsia Registry, after which samples and sequencing data will be available to other investigators for future research. This ~~result was determined~~collaboration complements and extends our ongoing preeclampsia research initiatives. Over 20,000 DNA samples from our biorepository relating to ~~be statistically significant with~~preeclampsia and associated obstetric syndromes are being analyzed.

In November 2019, Predictive Biotech’s HCT/P processing facility successfully achieved the internationally recognized ISO 13485 certification over the Company’s system of laboratory quality controls.

In December 2019, Predictive Biotech submitted to the Centers for Medicare and Medicaid Services (CMS) a ~~p-value~~HCPCS code application for each of ~~less than 10~~^-16.the company’s four allograft products (CoreCyte™, PolyCyte™, AmnioCyte Plus™ and AmnioCyte™) as part of the company’s strategy to obtain insurance reimbursement.

Results of Operations for the Three Months Ended ~~March~~December 31, 2019 and 2018

The ~~increase~~decrease in revenue for the three months ended December 31, 2019 is primarily due to ~~continued growth~~the decline in sales volume of allograft products compared to the three months ended December 31, 2018. The Company believes the decrease in sales volume is due to increased United States Food and Drug Administration (“FDA”) enforcement efforts affecting the regenerative medicine industry as a whole, which has negatively impacted the size of the market for regenerative medicine services and caused a contraction of sales of allograft products. Specifically, the FDA has issued warnings to competitors regarding their safety practices and increased regulatory scrutiny of potentially inappropriate marketing practices of some providers of regenerative medicine services. Predictive Biotech, Inc. continues to be the market share leader of regenerative medicine products in the ~~sales volume~~US with an excellent safety and ~~increasing demand for our HCT/P products. The Company increased its presence at trade shows, expanded the sales headcount year~~quality record of over ~~year,~~100,000 allografts implanted and ~~added several new distributors allowing our products to be sold to more doctors and clinics in the United States.~~

Revenues in our diagnostics and therapeutics segment were not material for the ~~quarter.~~

Cost of goods sold for the three months ended December 31, 2019 increased to $5.8 million from $3.1 million for the three months ended December 31, 2018. The increase is primarily due to $1.9 million in scrap expense and idle capacity costs resulting from efforts to curtail production in response to the trend in sales. In addition, there was a $0.8 million increase in scrap expense due to a decrease in average quality control pass rates for WIP product compared to the three months ended December 31, 2018.

Cost of sales ~~as a percentage of revenue decreased slightly from 42.4% to 42.3% during~~in our diagnostics and therapeutics segment was not material for the periods shown.

Selling and marketing expenses for the three months ended ~~March~~December 31, 2019 ~~compared~~decreased to $3.0 million from $3.4 million for the ~~same period~~three months ended December 31, 2018. The decrease is due to increases in personnel costs of $0.6 million, offset by a decrease in commissions expense of $1.0 million.

Substantially all of our selling and marketing expenses were incurred in the ~~prior year. The decrease was primarily driven~~HCT/P segment.

General and administrative expenses for the three months ended December 31, 2019 increased to $7.0 million from $2.9 million for the three months ended December 31, 2018. Approximately $3.3 million of the increase is due to increased share-based compensation expenses. Personnel costs also increased by ~~the implementation of more efficient production methods for our HCT/P products.~~$0.6 million.

Research and development ~~expense~~expenses for the three months ended ~~March~~December 31, 2019 increased to $2.4 million from 8.7% to 12.9% during the three months ended March 31, 2019 compared to the same period in the prior year, primarily driven by increased spending to develop improved processing methods for our HCT/P products, as well as continued development of our diagnostic products.

~~Selling, general and administrative expense increased~~$1.8 million for the three months ended ~~March~~December 31, ~~2019 decreased compared~~2018. R&D expenses primarily related to the ~~same period in the prior year primarily due to expansion~~development of ~~headcount in our accounting, marketing, administrative support,~~new HCT/P products and ~~other functions necessary to support our growth.~~continued development of molecular diagnostic tests.

Depreciation and amortization expense increased compared to the same period in the prior fiscal year primarily due to an increase in our intangible asset portfolio arising from the business combinations and asset acquisitions described in Note 23 to the accompanying condensed consolidated financial statements. Capital expenditures to acquire property, plant, and equipment in connection with our laboratory expansion also contributed to the increase.

Other loss for the three months ended December 31, 2019 increased to $16.5 million from $0.6 million for the three months ended December 31, 2018. The increase was primarily driven by the $15.9 million impairment charge recognized related to our equity method investment in Juneau Biosciences, LLC.

The decrease in revenue for the three months ended December 31, 2019 is primarily due to the decline in sales volume of allograft products compared to the three months ended December 31, 2018. The Company believes the decrease in sales volume is due to increased United States Food and Drug Administration (“FDA”) enforcement efforts affecting the regenerative medicine industry as a whole, which has negatively impacted the size of the market for regenerative medicine services and caused a contraction of sales of allograft products. Specifically, the FDA has issued warnings to competitors regarding their safety practices and increased regulatory scrutiny of potentially inappropriate marketing practices of some providers of regenerative medicine services. Predictive Biotech, Inc. continues to be the market share leader of regenerative medicine products in the US with an excellent safety and quality record of over 100,000 allografts implanted and no adverse events.

Revenues in our diagnostics and therapeutics segment were not material for the periods shown.

Cost of goods sold for the six months ended December 31, 2019 increased to $13.0 million from $6.1 million for the six months ended December 31, 2018. The increase is primarily due to $3.8 million in scrap expense related to HCT/P product that did not pass quality control, or that is not expected to pass quality control. The increase in quality control failure rates above normal levels was primarily due to issues with a component supplied by a specific vendor. An additional $1.9 million in scrap expense and other idle capacity costs resulted from efforts to curtail production in response to the trend in sales.

Cost of sales in our diagnostics and therapeutics segment was not material for the periods shown.

Selling and marketing expenses for the six months ended December 31, 2019 increased to $6.2 million from $5.8 million for the six months ended December 31, 2018. The increase is due to increases in personnel costs of $1.6 million and increased bad debt expense of $0.2 million, offset by a decrease in commissions expense of $1.4 million.

Substantially all of our selling and marketing expenses were incurred in the HCT/P segment.

General and administrative expenses for the six months ended December 31, 2019 increased to $13.4 million from $5.5 million for the six months ended December 31, 2018. Approximately $5.6 million of the increase is due to increased share-based compensation expenses. Personnel costs increased by $1.8 million.

Research and development expenses for the six months ended December 31, 2019 increased to $4.2 million from $2.4 million for the six months ended December 31, 2018. The increase was primarily driven by an increase of $1.5 million in share based compensation expense.

Depreciation and amortization expense increased compared to the same period in the prior fiscal year primarily due to an increase in our intangible asset portfolio arising from the business combinations and asset acquisitions described in Note 3 to the accompanying condensed consolidated financial statements. Capital expenditures to acquire property, plant, and equipment in connection with our laboratory expansion also contributed to the increase.

~~For~~Other loss for the ~~three~~six months ended ~~March~~December 31, 2019 ~~compared~~decreased to $16.8 million from $0.9 million for the ~~same period in the prior year, the change in other income expense~~six months ended December 31, 2018. The increase was primarily driven by the ~~bargain purchase gain arising from the acquisition of Taueret Laboratories, LLC described in Note 2 to the consolidated financial statements.~~

The increase in revenue is primarily due to continued growth in the sales volume of our HCT/Ps products through increasing trade show presence, expansion of the salesforce, expansion of our distribution networks, and entering new geographies within the United States.

Cost of sales as a percentage of revenue decreased slightly from 37.5% to 36.2% during the nine months ended March 31, 2019 compared to the same period in the prior year. The decrease was primarily driven by operational efficiencies and increased quality control measures allowing for increased yields and decreased processing times for our products.

Research and development expense for the nine months ended March 31, 2019 increased from 4.4% to 12.7% of revenues compared to the same period in the prior year. This increase was due to an increase in costs$15.9 million impairment charge recognized related to ~~continued development of existing product categories such as new methods of processing HCT/Ps. We also increased spending on development of our proprietary diagnostic tests.~~

Selling, general and administrative expense increased due to increases in headcount, implementation of software systems, and other investments in sales and general and administrative functions necessary to support our current and anticipated future operations.

Depreciation and amortization expense increased compared to the same period in the prior year primarily due to an increase in our intangible asset portfolio arising from the business combinations and asset acquisitions described in Note 2 to the consolidated financial statements. Capital expenditures to acquire property, plant, and equipment in connection with our laboratory expansion also contributed to the increase.

~~For the nine months ended March 31, 2019 compared to the same period in the prior year, the change in other income (expense) was primarily driven by increased losses from~~ our equity method investment ~~caused by increasing our percentage ownership~~ in Juneau Biosciences, LLC. ~~These losses were partially offset by the bargain purchase gain arising from the acquisition of Taueret Laboratories, LLC as described in Note 2 to the consolidated financial statements.~~

~~We believe that our existing capital resources and the cash to be generated from future sales will be sufficient to meet our projected operating requirements~~The Company incurred a net loss of $33,867,276 for the ~~foreseeable future.~~six months ended December 31, 2019 and net cash outflows from operations of $9,914,968. At December 31, 2019, the Company had $255,502 of cash and negative working capital of $4,861,267. The Company's historical and current use of cash in operations combined with limited liquidity resources raise substantial doubt regarding the Company's ability to continue as a going concern. Management may seek additional capital through debt financings, collaborative or other funding arrangements with partners, or through other sources of financing. Should the Company ~~has no long-term obligations other than lease payables and~~seek additional financing from outside sources, the Juneau subscription agreement, which may be cancelled at any time. However, our available capital resources may be consumed more rapidly than currently expected and we may need or want to raise additional financing. WeCompany may not be able to ~~secure~~raise such financing ~~in a timely manner~~on terms acceptable to the Company or at all. If the Company is unable to raise additional capital when required or on ~~favorable~~acceptable terms, ~~if at all. Without additional funds, we~~this could have a material adverse effect on liquidity. In such a case, the Company may be ~~forced~~required to ~~delay,~~ scale back or ~~eliminate some~~to discontinue the promotion of ~~our sales and marketing efforts, research and development activities,~~currently available products, scale back or ~~other operations and potentially delay development~~discontinue the advancement of ~~our diagnostic tests~~product candidates, reduce headcount, file for bankruptcy, reorganize, merge with another entity, or ~~other products in an effort to provide sufficient funds to continue our~~cease operations. ~~If any of these events occurs, our ability to achieve our development and commercialization goals would be adversely affected.~~

Our capital deployment strategy focuses on use of resources in two key areas: research and development, and the commercialization of our HCT/Ps and diagnostic products. We believe that research and development provides the best return on invested capital. We also allocate capital for acquisitions that support our business strategy.


	Nine months ended						Six months ended
	March 31,						December 31,
(In millions)	2019		2018		Change
							2019		2018		Change
Cash provided by (used in) operating activities	$	3,059,291	$	(2,568,800)	$	5,628,091	$	(9,914,968)	$	2,058,633	$	(11,973,601)
Cash used in investing activities		(3,467,143)		(2,585,218)		(881,925)		(946,856)		(1,729,843)		782,987
Cash provided by (used in) financing activities		1,028,133		4,608,280		(3,580,147)
Cash provided by financing activities								9,499,082		1,025,000		8,474,082
Net increase (decrease) in cash and cash equivalents		620,281		(545,737)				(1,362,742)		1,353,790
Cash and cash equivalents at the beginning of the year		1,206,139		968,202
Cash and cash equivalents at the beginning of the six months								1,618,244		1,206,139
Cash and cash equivalents at the end of the period	$	1,826,420	$	422,465			$	255,502	$	2,559,929

The increase in cash ~~provided by~~used in operating activities for the ~~nine~~six months ended ~~March~~December 31, 2019 compared to the ~~same period in the prior year,~~six months ended December 31, 2018 was primarily due to a ~~$1.1~~$29.5 million ~~decrease~~increase in net loss, ~~excluding noncash items such as depreciation, amortization,~~ and ~~losses~~a $8.1 million increase in deferred income tax benefits, offset by increases of non-cash addbacks for loss on equity method ~~investments; as well as a $1.8~~investment of $15.5 million, ~~decrease in inventory acquired for cash~~share based compensation of $7.6 million, and ~~a $1.6 million increase in accounts payable~~depreciation and ~~accrued liabilities.~~amortization of $1.7 million.

~~For the nine months ended March 31, 2019, compared to the same period in the prior year, the~~The decrease in cash used in investing activities for the six months ended December 31, 2019 compared to the six months ended December 31, 2018 was ~~driven~~ primarily bydue to a ~~$2.0 million~~ decrease in ~~purchases~~cash paid on our subscription payable of ~~intellectual property~~$0.7 million and ~~$0.9~~a decrease in capital expenditures of $0.7 million. These changes were partly offset by $0.8 million in cash ~~acquired in acquisitions offset by a $2.2 million increase in purchases~~received from the acquisition of ~~property, plant, and equipment and $1.6 million of cash payments to settle our subscription arrangement with Juneau Biosciences,~~InceptionDX, LLC.

~~For the nine months ended March 31, 2019, compared to the same period in the prior year, the decrease~~The increase in cash provided by financing activities for the six months ended December 31, 2019 compared to the six months ended December 31, 2018 was ~~driven~~ primarily bydue to the ~~$3.6~~receipt of $9.7 million ~~decrease~~ in proceeds from the ~~subscription for our common stock.~~issuance of promissory notes, offset by a decrease of $1.0 million in cash received from stock subscriptions.

We do not believe that inflation has had a material impact on our business, sales, or operating results during the periods presented.

~~In the three and nine months ended March 31, 2019, there were no material changes to our contractual obligations as discussed in our registration statement on Form 10 for the year ended June 30, 2018.~~

We currently do not have any off-balance sheet arrangements or financing activities with special-purpose entities.

Critical accounting policies are those policies which are both important to the presentation of a company’s financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. ~~During the first quarter of fiscal 2019, we adopted new accounting guidance related to revenue recognition, which is described above at “Recently Adopted Accounting Pronouncements.”~~ There have been no ~~other~~ recent significant changes to our accounting ~~policies.~~policies during the six months ended December 31, 2019, other than the adoption of ASU 2016-02 discussed in detail in Footnote 1 to the accompanying unaudited condensed consolidated financial statements. For a further discussion of our critical accounting policies, see our Annual Report on Form 1010-K for the fiscal year ended June 30, ~~2018.~~2019.

The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

All statements in this report, other than statements of historical fact, are forward-looking statements for purposes of these provisions, including any projections of earnings, revenues or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. All forward-looking statements included in this report are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any forward-looking statement. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are based upon reasonable assumptions at the time made, there can be no assurance that any such expectations or any forward-looking statement will prove to be correct. Our actual results will vary, and may vary materially, from those projected or assumed in the forward-looking statements. Future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not anticipate, including, without limitation, product recalls and product liability claims; infringement of our technology or assertion that our technology infringes the rights of other parties; termination of supplier relationships, or failure of suppliers to perform; inability to successfully manage growth; delays in obtaining regulatory approvals or the failure to maintain such approvals; concentration of our revenue among a few customers, products or procedures; development of new products and technology that could render our products obsolete; market acceptance of new products; introduction of products in a timely fashion; price and product competition, availability of labor and materials, cost increases, and fluctuations in and obsolescence of inventory; volatility of the market price of our common stock; foreign currency fluctuations; changes in key personnel; work stoppage or transportation risks; integration of business acquisitions; and other factors referred to in our reports filed with the SEC, including our Registration Statement on Form 10. All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Additional factors that may have a direct bearing on our operating results are discussed in Item 1A “Risk Factors” in our Registration Statement on Form 10. In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report or in any document incorporated by reference might not occur. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements attributable to us or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

We maintain ~~“disclosure~~disclosure controls and procedures~~” as such term is defined in Rule~~ (Disclosure Controls) within the meaning of Rules 13a-15(e) and ~~15d-15(c) under~~15d-15(e) of the Securities Exchange Act of 1934, as amended, ~~(the “Exchange Act”), that~~or the Exchange Act. Our Disclosure Controls are designed to ensure that information required to be disclosed by us in the reports ~~that~~ we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange ~~Commission~~Commission’s rules and ~~forms, and~~forms. Our Disclosure Controls are also designed to ensure that such information is accumulated and communicated to our management, including our ~~principle executive officer~~Chief Executive Officer and ~~principal financial officer,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our ~~disclosure controls and procedures,~~Disclosure Controls, management recognized that ~~disclosure~~any controls and procedures, no matter how well ~~conceived~~designed and operated, can provide only reasonable ~~not absolute,~~ assurance ~~that~~of achieving the desired control objectives, ~~of the disclosure controls~~ and ~~procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our~~ management necessarily ~~was required to apply~~applied its judgment in evaluating ~~the cost-benefit relationship of~~and implementing possible ~~disclosure~~ controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Our management, under the supervision and with the participation of the principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures asAs of the end of the period covered by this Quarterly ~~Report.~~Report on Form 10-Q, we evaluated the effectiveness of the design and operation of our Disclosure Controls, which was done under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer. Based on ~~this~~the evaluation of our ~~principal executive officer~~Disclosure Controls, our Chief Executive Officer and ~~principal~~Chief Financial Officer have concluded that, as of December 31, 2019, our Disclosure Controls were not effective due to a material weakness in the Company’s internal control over financial ~~officer~~reporting as disclosed below.

Based on our prior assessment as of June 30, 2019, management concluded that our ~~disclosure controls and procedures were~~internal control over financial reporting was not effective ~~as of March 31, 2019 as~~due to a ~~result of the~~ material weakness ~~discussed below.~~

related to insufficient controls over the accounting for the income tax effects of business combinations and asset acquisitions. A ~~material weakness~~“material weakness” is a deficiency, or a combination of deficiencies, in ~~internal control~~Internal Control over ~~financial reporting~~Financial Reporting ("ICFR"), such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected inon a timely basis. ~~In connection with the review of our financial statements~~Such material weakness has not yet been remediated as of ~~and for the third fiscal quarter ended March~~December 31, ~~2019, we determined that there were material errors in our provision for income taxes for the current period and prior periods, primarily related~~2019.

3. Plan to ~~the income tax accounting for business combinations and asset acquisitions.~~Remediate Material Weakness

We plan to enhance existing controls by improving their design and to design and implement new controls applicable to our income tax accounting, to ensure that our income tax balances are accurately calculated and appropriately reflected in our financial statements on a timely basis. Specifically, we will add incremental controls to determine the income tax effects of unique transactions. We ~~plan to devote significant time and attention to remediate the above material weakness as soon as reasonably possible, and we plan to engage~~have engaged third party income tax experts to assist in the preparation of our income tax provisions. ~~As we continue to evaluate our controls, we will make the necessary changes to improve the overall design and operation of our controls.~~ We believe ~~these actions~~that improving the design of existing controls, adding incremental controls to determine the tax effects of unique transactions, and engaging third party tax specialists will be sufficient to remediate the identified material weakness and strengthen our internal control over financial reporting; however, there can be no guarantee that such remediation will be sufficient. We will continue to monitor the effectiveness of our controls and will make any further changes management determines appropriate.

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our president (our principal executive officer and our principal accounting officer and principal financial officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; (2) provide reasonable assurance that transactions are recordedExcept as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of our Company are being made only in accordance with authorizations of management and directors of our Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has conducted, with the participation of our president, our principal executive officer and our principal accounting officer and principal financial officer, an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2019 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control — Integrated Framework. Based on this assessment, management concluded that as of March 31, 2019, our Company’s internal control over financial reporting was not effective based on present Company activity. Our Company is in the process of adopting specific internal control mechanisms. Future controls, among other things, will include more checks and balances and communication strategies between the management and the board to ensure efficient and effective oversight over Company activities as well as more stringent accounting policies to track and update our financial reporting.

~~There~~described above, there were no changes in our internal control over financial reporting ~~identified in connection with the evaluation described above~~that occurred during the ~~quarter~~three months ended ~~March~~December 31, 2019, that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

On or about July 13, 2018, RTJ, LLC and two of its principals filed a lawsuit against Predictive Therapeutics LLC, Predictive Biotech, Inc., both subsidiaries of Predictive Technology Group, Inc., and Jack Turner, Jr., an employee of Predictive Biotech, Inc. The plaintiffs had acted in a distributor capacity. The relationship was terminated. Plaintiffs are alleging breach of contract, promissory estoppel, unjust enrichment, fraud, breach of fiduciary duty, defamation, false light, and tortious interference. Based on the information available to us, we do not believe any of the RTJ proceedings will have a material adverse effect on our business, results of operations, financial position or liquidity. Further, we deny the allegations in the complaint, have not discovered any evidence of wrongdoing with respect to the allegations and will vigorously defend against these allegations.

On or about May 1, 2019, Surgenex, LLC and one of its principals filed a lawsuit against Predictive Therapeutics LLC, Predictive Biotech, Inc., both subsidiaries of Predictive Technology Group, Inc., and Doug Schmid, an employee of Predictive Biotech, Inc. In 2014, Surgenex contracted with Utah ~~Cords~~Cord Bank, Inc., a former employer of Doug Schmid, to assist Surgenex in the doing work relating to allograft tissue. Schmid was later hired by Predictive Biotech, Inc. In connection with Schmid’s employment with Predictive Biotech, Surgenex has filed a lawsuit alleging unjust enrichment, conspiracy, conversion, tortious interference with contractual and business relations, violations of trade secrets act, and other claims. Based on the information available to us, we do not believe the Surgenex proceedings will have a material adverse effect on our business, results of operations, financial position or liquidity. Further, we deny the allegations in the complaint, have not discovered any evidence of wrongdoing with respect to the allegations and will vigorously defend against these allegations.

On or about July 12, 2019, Predictive Technology Group, Inc. and Predictive Therapeutics, LLC, a subsidiary of Predictive Technology Group, Inc. filed a lawsuit against Michael Schramm. Schramm had previously acted as our patent agent. While acting as our patent agent, Schramm entered into an agreement to sell us certain patents and patent applications in consideration for equity securities. Schramm represented that he owned all right, title and interest in and to the intellectual property. We were subsequently advised by the patent counsel who replaced Schramm that Schramm’s representation was false. The Company raised these concerns with Schramm, who did not provide satisfactory evidence addressing the concerns of our current patent counsel. We sued Schramm for breach of contract, conversion and on other legal theories and are seeking, among other things, rescission of the purchase and sale transaction. Schramm filed a counterclaim against us and Bradley C. Robinson, our Chief Executive Officer and Transfer Online, Inc., our transfer agent. Schramm is alleging he did not make any false representations. He is alleging, among other things, that various parties involved in the transaction committed breach of contract, conversion, violations of Nevada state law for failure to transfer securities, breach of fiduciary duty, tortious interference, and civil conspiracy. Based on the information available to us, we do not believe the Schramm proceedings will have a material adverse effect on our business, results of operations, financial position or liquidity. Further, we deny the allegations in the counterclaim, have not discovered any evidence of wrongdoing with respect to the allegations in the counterclaim and will vigorously prosecute our claims against Schramm.

As of ~~March~~December 31, 2019, ~~the Company~~we did not record a liability related to these matters as it was determined that an unfavorable resolution is either not currently probable or that an amount or relevant range is not reasonably ~~estimable.~~estimable, or both. However, litigation is inherently unpredictable and it is possible that losses may occur. Any unfavorable resolution of any of these matters could materially affect ~~the Company’s~~our consolidated financial position, cash flows, or results of operations. All legal costs associated with litigation are expensed as incurred.

~~Not applicable~~There have been no material changes to ~~a smaller reporting company.~~the risk factors included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

During the six months ended December 31, 2019, the Company issued (or is obligated to issue) the following shares:

~~None.~~1) In September 2019, the Company entered into an agreement with a consultant for research and development services. The consultant is an accredited investor. In consideration for these services, the Company granted warrants to the consultant exercisable for 1,250,000 shares of the Company’s common stock with a strike price equal to the closing price of the Company’s common stock on the date of grant. Warrants to acquire 625,000 shares vested upon issuance. Of the remaining warrants, 375,000 vest on March 1, 2020 and 225,000 vest on September 1, 2020. The warrants expire ten years from the date of issuance.

2) On December 31, 2019, four accredited investors agreed to accept repayment in equity shares for promissory notes with a face value of $8,420,000 and the $720,000 outstanding under of the Revolving Loan Agreement, as well as $311,918 in accrued interest thereon. The debt was repaid in full by issuing 12,947,833 shares of the Company’s common stock based on the closing market price on December 31, 2019 of $0.73 per share.

All securities issued by us that are referenced above are deemed "restricted securities" within the meaning of that term as defined in Rule 144 of the Securities Act and have been issued pursuant to the "private placement" exemption under Section 4(a)(2) of the Securities Act. Such transactions did not involve a public offering of securities, no underwriter was involved with the transactions, and no commissions were paid. All purchasers in the private placement had access to information on the Company necessary to make an informed investment decision. We have been informed that all purchasers are able to bear the economic risk of this investment and are aware that the securities were not registered under the Securities Act and cannot be re-offered or re-sold unless they are registered or are qualified for sale pursuant to an exemption from registration. The transfer agent and registrar of the Company was instructed to mark "stop transfer" on its ledger regarding these shares.

Neither the Company nor any person acting on its behalf offered or sold the securities by means of any form of general solicitation or general advertising.

The securities were acquired for the purchasers own account and not with the view to sell, or for resale in connection with any distribution. A legend was placed on the certificates issued stating that the securities have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom

In Item 12 of our Annual Report on Form 10-K as of and for the year ended June 30, 2019, we reported that Eric Olson, Executive Vice President and Chief Executive Officer of Predictive Biotech, Inc., was the beneficial owner of 7,500,000 shares of our common stock held by Integrity Trust Company, LLC. These 7,500,000 common shares were cancelled and 7,500,000 shares were issued to Integrity Capital Holdings, LLC. Mr. Olson remains the beneficial owner of the shares.

~~(2) Previously filed as Exhibit on Form 10-Q period ending September 30, 2019-~~ ~~February 14, 2019~~

* XBRL Interactive Data Tags to be filed as an amendment to this Form 10-Q filing

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

I, Bradley C. Robinson, certify, to my best knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Predictive Technology Group, Inc., on Form 10-Q for the quarter ended ~~March~~December 31, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Predictive Technology Group, Inc.

I, Simon Brewer, certify, to my best knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Predictive Technology Group, Inc. on Form 10-Q for the quarter ended ~~March~~December 31, 2019, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Predictive Technology Group, Inc.


(Mark One) [X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended ~~March~~December 31, 2019

	Or

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period _______ to _______


Nevada		90-1139372
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

2735 Parleys Way, Suite 205, Salt Lake City, Utah		84109
(Address of principal executive offices)		(Zip Code)


Larger Accelerated Filer [ ]	Accelerated Filer [ ]
Non-Accelerated Filer [ ] (Do not check if a smaller reporting company)	Smaller Reporting Company [X]
Emerging growth company [ ]


	Three months ended December 31,				Six months ended December 31,
	2019		2018		2019		2018
Revenue	$	7,336,640	$	10,687,036	$	15,595,898	$	18,750,838
Cost of goods sold, exclusive of depreciation & amortization shown below		5,840,256		3,059,136		13,022,246		6,107,692

Operating expenses:
Selling and marketing		3,049,593		3,431,157		6,201,563		5,838,593
General and administrative		7,034,770		2,878,614		13,413,647		5,544,762
Research and development		2,364,350		1,759,560		4,192,700		2,365,644
Depreciation and amortization		2,775,073		2,035,360		5,385,318		3,701,082
Total operating expenses		15,223,786		10,104,691		29,193,228		17,450,081

Operating loss		(13,727,402)		(2,476,791)		(26,619,576)		(4,806,935)

Loss on equity method investment		(16,249,252)		(600,116)		(16,388,552)		(914,898)
Interest income (expense)		(297,736)		489		(371,218)		912
Total other loss		(16,546,988)		(599,627)		(16,759,770)		(913,986)

Loss before income taxes		(30,274,390)		(3,076,418)		(43,379,346)		(5,720,921)

Benefit from income taxes		4,239,780		713,526		9,448,195		1,325,978

Net loss & comprehensive loss	$	(26,034,610)	$	(2,362,892)	$	(33,931,151)	$	(4,394,943)

Net loss non-controlling interest		(31,941)		(33,454)		(63,875)		(61,123)

Net loss attributable to common shareholders	$	(26,002,669)	$	(2,329,438)	$	(33,867,276)	$	(4,333,820)

Weighted average common shares outstanding, basic & diluted		283,126,298		263,278,417		282,203,748		258,672,982

Basic & diluted loss per share attributable to common shareholders	$	(0.09)	$	(0.01)	$	(0.12)	$	(0.02)


	Nine months ended March 31,
	2019	2018
Common stock issued for license agreement	-	18,159,211
Minority interest acquired for conversion of notes	-	3,685,308
Acquisition of minority interests	-	8,577,918
Common stock and warrants issued for acquisitions	39,637,897	-
Revaluation of warrants issued for license agreement	(4,449,211)	-


	Three months ended March 31,				Nine months ended March 31,
	2019		2018		2019		2018
Revenue	$	11,295,618	$	4,232,650	$	30,046,456	$	9,472,404
Cost of goods sold		4,773,332		1,794,363		10,881,024		3,553,912
Gross profit		6,522,286		2,438,287		19,165,432		5,918,492

Operating expenses:
Sales and marketing		2,888,309		4,321,441		8,726,902		10,040,226
General administrative		4,835,652		1,360,304		10,380,413		4,700,683
Research and product development		1,458,265		366,656		3,823,908		416,536
Amortization and depreciation expense		2,374,006		1,148,262		6,075,090		3,386,626
Total operating expenses		11,556,232		7,196,663		29,006,313		18,544,071

Operating loss		(5,033,946)		(4,758,376)		(9,840,881)		(12,625,579)

Other income (loss), net		81,988		(25,449)		(831,998)		178,085

Loss before income taxes		(4,951,958)		(4,783,825)		(10,672,879)		(12,447,494)

Benefit from income taxes		(1,215,312)		(1,579,463)		(2,541,290)		(4,905,699)

Net loss	$	(3,736,646)	$	(3,204,362)	$	(8,131,589)	$	(7,541,795)

Net loss non-controlling interest		(27,735)		(10,946)		(88,858)		(32,837)

Net loss controlling interest & comprehensive loss	$	(3,708,911)	$	(3,193,416)	$	(8,042,731)	$	(7,508,958)

Weighted average common shares		272,029,651		234,698,827		263,060,001		234,698,827

Basic & diluted loss per share	$	(0.01)	$	(0.01)	$	(0.03)	$	(0.03)


	Common stock		Additional paid-in capital	Commons stock subscriptions	Non-controlling interests		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
BALANCES AT JUNE 30, 2018	247,624,069	$247,624	$108,049,300	$(1,025,000)		$(120,152)		$(25,813,957)		$81,337,815
Common stock issued for acquisitions	15,500,000	15,500	14,244,500							14,260,000
Common stock issued for services	50,000	50	43,450							43,500
Common stock cancelled	(1,200,000)	(1200)	-							(1,200)
Warrants issued for trade secrets			13,860,000							13,860,000
Cash received from common stock subscriptions				325,000						325,000
Warrants and options issued for services			906,949							906,948
Net loss						(27,669)		(2,004,382)		(2,032,051)
BALANCES AT SEPTEMBER 30, 2018	261,974,069	$261,974	$137,104,199	$(700,000)		$(147,821)		$(27,818,339)		$ 108,700,013
Revaluation of warrants issued for license agreement			(4,449,211)							(4,449,211)
Common stock issued for acquisition	10,000,000	10,000	9,190,000							9,200,000
Cash received from common stock subscriptions				700,000						700,000
Warrants and options issued for services			653,372							653,372
Net loss						(33,454)		(2,329,438)		(2,362,892)
BALANCES AT DECEMBER 31, 2018	271,974,069	$271,974	$142,498,360	-		$(181,275)		$(30,147,777)		$112,441,282
Common stock issued for acquisition	552,995	553	1,016,958							1,017,511
Adoption of ASU 2018-07			(16,278)					16,278		-
Warrants and options issued for services			2,634,969							2,634,969
Exercise of stock options	3,333	3	3,130							3,133
Net loss						(27,735)		(3,708,911)		(3,736,646)
BALANCES AT March 31, 2019	272,530,397	$272,530	$146,137,139	-		$(209,910)		$(33,840,410)		$112,360,249


	Common Stock				Additional		Subscription		Non-Controlling		Accumulated		Stockholders’
	Shares		Amount		Paid in Capital		Receivable		Interest		Deficit		Equity
BALANCES AT JUNE 30, 2018	247,624,069	$	247,624	$	108,049,300	$	(1,025,000)	$	(120,152)	$	(25,813,957)	$	81,337,815
Common stock issued for acquisition of InceptionDX, LLC	15,500,000		15,500		14,244,500								14,260,000
Common stock issued for services	50,000		50		43,450								43,500
Common stock cancelled	(1,200,000)		(1,200)		1,200								-
Warrants issued for trade secrets					13,860,000								13,860,000
Cash received from common stock subscriptions							325,000						325,000
Share based compensation					928,846								928,846
Net loss									(27,669)		(2,004,382)		(2,032,051)
BALANCES AT SEPTEMBER 30, 2018	261,974,069	$	261,974	$	137,127,296	$	(700,000)	$	(147,821)	$	(27,818,339)	$	108,723,110
Common stock issued for acquisition of Regenerative Medical Technologies, Inc.	10,000,000		10,000		9,190,000								9,200,000
Share based compensation					1,010,505								1,010,505
Revaluation of warrants issued for licenses					(4,449,211)								(4,449,211)
Cash received from common stock subscriptions							700,000						700,000
Net loss									(33,454)		(2,329,438)		(2,362,892)
BALANCES AT DECEMBER 31, 2018	271,974,069	$	271,974	$	142,878,590	$	-	$	(181,275)	$	(30,147,777)	$	112,821,512

	Common Stock				Additional		Subscription		Non-Controlling		Accumulated		Stockholders’
	Shares		Amount		Paid in Capital		Receivable		Interest		Deficit		Equity
BALANCES AT JUNE 30, 2019	273,761,955	$	273,762	$	153,604,830	$	-	$	(239,280)	$	(41,102,849)	$	112,536,463
Share based compensation					4,994,600								4,994,600
Cashless exercise of warrants	9,223,605		9,224		(9,224)								-
Net loss									(31,934)		(7,864,607)		(7,896,541)
BALANCES AT SEPTEMBER 30, 2019	282,985,560	$	282,986	$	158,590,206	$	-	$	(271,214)	$	(48,967,456)	$	109,634,522
Share based compensation					4,634,069								4,634,069
Net Loss									(31,941)		(26,002,669)		(26,034,610)
BALANCES AT DECEMBER 31, 2019	282,985,560	$	282,986	$	163,224,275	$	-	$	(303,155)	$	(74,970,125)	$	88,233,981


	Three months ended				Nine months ended
	March 31,				March 31,
	2019		2018		2019		2018
Total operating loss for reportable segments	$	(5,033,946)	$	(4,758,376)	$	(9,840,881)	$	(12,625,579)
Unallocated amounts:
Loss from equity method investment		(193,524)		(22,647)		(1,108,423)		(22,647)
Interest income		1,508		-		2,420		199,732
Other income (expense)		1,247		(2,802)		1,248		1,000
Bargain purchase gain		272,757		-		272,757		-
Loss before income taxes		(4,951,958)		(4,783,825)		(10,672,879)		(12,447,494)
Income tax benefit		(1,215,312)		(1,579,463)		(2,541,290)		(4,905,699)
Net loss		(3,736,646)		(3,204,362)		(8,131,589)		(7,541,795)
Net loss attributable to non-controlling interest		(27,735)		(10,946)		(88,858)		(32,837)
Net loss attributable to Predictive Technology Group, Inc. stockholders	$	(3,708,911)	$	(3,193,416)	$	(8,042,731)	$	(7,508,958)



		Amount
Deferred revenue at June 30, 2019	$	469,376
Increase due to deferral of revenue at period end		512,280
Decrease due to beginning contract liabilities recognized as revenue		(469,376)
Deferred revenue at December 31, 2019	$	512,280


		Three months ended December 31,
		2018
		(As reported)	(Adjustment)	(Restated)
Revenue from operations (net)		$ 10,687,036	$ -	$ 10,687,036
Cost of goods sold, exclusive of depreciation & amortization shown below		3,059,136	-	3,059,136

Selling and marketing		3,431,157	-	3,431,157
General and administrative		2,520,281	358,333	2,878,614
Research and development		1,759,560	-	1,759,560
Depreciation and amortization		1,992,534	42,826	2,035,360
	Total operating expense	9,703,532	401,159	10,104,691
Loss from operations		(2,075,632)	(401,159)	(2,476,791)

Other loss		(599,627)	-	(599,627)
Loss before income taxes		(2,675,259)	(401,159)	(3,076,418)
Benefit from income taxes		-	713,526	713,526
Net loss		(2,675,259)	312,367	(2,362,892)
	Net loss non-controlling interest	(33,454)	-	(33,454)
Net loss controlling interest		$ (2,641,805)	$ 312,367	$ (2,329,438)

Loss per common share
Basic and diluted		$ (0.01)	$ -	$ (0.01)

Average common shares
Basic and diluted		230,111,417	33,167,000	263,278,417



Assets:		Amount
Cash	$	799,980
Lab equipment		1,177,750
Investment in non-controlling interest		440,000
Trade secrets		11,842,270
Total purchase price	$	14,260,000


-	~~Cash~~	~~$799,980~~

-	~~Lab equipment~~	~~700,000~~

-	~~Investment in minority interest~~	~~440,000~~

-	~~Trade secrets~~	~~12,320,020~~

	~~Total Purchase Price~~	~~$14,260,000~~



Risk-free interest rate		2.7%
Expected dividend yield		0%
Expected life (in years)		5.0
Expected volatility		150%


Year Ending June 30
2019	$	289,473
2020		1,226,667
2021		1,226,667
2022		1,226,667
2023		1,226,667
Thereafter		6,684,562



Assets:	Fair Value
Current assets	$	663,262
Laboratory equipment	190,397
Software	239,000
Intangible Assets	311,000
Total assets acquired	1,403,659
Liabilities:
Accrued liabilities	(68,181)
Capital lease obligation	(54,291)
Deferred tax liabilities	(90,919)
Total liabilities assumed	(213,391)
Bargain purchase gain	(272,757)
Total fair value of purchase price	$	917,511
Consideration allocated to Preeclampsia Option		100,000
Total consideration	$	1,017,511
Less: Cash acquired		(85,964)
Total consideration transferred	$	931,817


	3 Months Ended March 31, 2019	9 Months Ended March 31, 2019		Year ended June 30, 2018
Revenue	$ 11,544,461	$	31,872,749	$	19,670,014
Loss from operations	(5,094,701)		(9,819,378)		(12,646,122)
Net loss	(3,979,401)		(8,110,086)		(6,381,045)


	Gross
	Carrying		Accumulated
	Amount		Amortization		Net
At March 31, 2019:
Licenses	$	17,511,314	$	(2,443,910)	$	15,067,404
Patents		10,059,511		(2,708,384)		7,351,127
Trade Secrets		52,533,686		(9,687,463)		42,846,223
Other		411,000		-		411,000
Total intangible assets	$	80,515,511	$	(14,839,757)	$	65,675,754


Juneau Biosciences, LLC		Year ended December 31, 2019		Year ended December 31, 2018
		Unaudited
Revenue (related party)	$	202,010	$	2,554,037
Gross profit		202,010		2,554,037
Loss from operations		(1,890,382)		(2,419,890)
Net loss		(1,889,921)		(2,419,824)
Net loss attributable to Predictive Technology Group, Inc.		(912,454)		(1,200,238)



Juneau Biosciences, LLC		As of December 31, 2018	As of December 31, 2017
		Unaudited		Audited
Current assets	$	148,527	$	40,077
Non current assets		27,159,139		152,824
Total assets	$	27,307,666	$	192,901
Current liabilities	$	1,257,917	$	5,768,235
Long-term liabilities		1,398,968		1,303,074
Total liabilities	$	2,656,885	$	7,071,309


Juneau Biosciences, LLC		Year ended December 31, 2018		Year ended December 31, 2017
		Unaudited		Audited
Revenue (related party)	$	2,554,037	$	2,443,677
Gross profit	$	2,554,037	$	2,443,677
Loss from operations	$	(2,419,890)	$	(45,744)
Net loss	$	(2,419,824)	$	(45,398)



		Number of	Weighted Average	Weighted Average Remaining
		Warrants	Exercise Price	Contractual Life
Warrants:
	Outstanding June 30, 2018	42,268,520	$0.50	3.9
	Granted	35,750,000	0.91	4.6
	Exercised	-	-	-
	Forfeited/Cancelled	(14,000,000)	0.80	4.3
	Outstanding March 31, 2019	64,018,520	0.73	4.2


		Number of Warrants		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)
Warrant:
Outstanding June 30, 2019		68,253,520	$	0.78	3.6
	Granted	1,250,000		1.73	9.7
	Exercised	(9,223,605)		0.50	2.7
	Forfeited/ Cancelled	(1,836,395)		0.50	2.7
Outstanding December 31, 2019		58,443,520	$	0.85	3.3


		Weighted
	Net	Average Shares	Per Share
	Loss	Outstanding	Amount
Three months ended March 31, 2018
Basic and diluted EPS	$(3,193,416)	234,698,827	$(0.01)
Three months ended March 31, 2019
Basic and diluted EPS	$(3,708,911)	272,029,651	$(0.01)



	Net	Weighted Average Shares	Per Share
	Loss	Outstanding	Amount
Nine months ended March 31, 2018
Basic and diluted EPS	$(7,508,958)	234,698,827	$(0.03)
Nine months ended March 31, 2019
Basic and diluted EPS	$(8,042,731)	263,060,001	$(0.03)


		Number of shares		Weighted average exercise price
Options outstanding at June 30, 2019		24,407,750	$	1.74
Options granted		2,595,800		1.40
Less:
	Options exercised	-		-
	Options canceled or expired	(1,082,500)		1.65
Options outstanding at end of period		25,921,050	$	1.72


		March 31, 2019			June 30, 2018
		Number of shares		Weighted average exercise price	Number of shares		Weighted average exercise price
Options outstanding at beginning of period		5,613,500	$	0.80	300,000	$	1.00
Options granted		7,070,000		1.17	5,313,500		0.79
Less:
	Options exercised	(3,333)		.94	-		-
	Options canceled or expired	(1,092,667)		.93	-		-
Options outstanding at end of period		11,587,500	$	1.02	5,613,500	$	0.80
Options exercisable at end of period		6,103,125	$	0.93	3,008,000	$	0.75


Year Ending June 30		Operating		Capital
2019	$	71,051	$	627,116
2020		94,734		2,013,408
2021		-		978,636
2022		-		730,932
2023		-		-
	$	165,785		4,350,092
Less: Imputed Interest				(451,130)
			$	3,898,962



Year Ending June 30,		Operating		Finance		Total
2020	$	476,816	$	393,090	$	869,906
2021		979,071		748,361		1,727,432
2022		246,888		740,797		987,685
2023		-		167,719		167,719
2024		-		-		-
Total cash payments		1,702,775		2,049,967		3,752,742
Less: Imputed interest		(128,619)		(214,844)		(343,463)
Total lease liability	$	1,574,156	$	1,835,123	$	3,409,279


			Three months ended December 31, 2019		Six months ended December 31, 2019
Lease cost
Finance lease cost
	Amortization of right of use assets	$	156,057	$	180,469
	Interest on lease liabilities		40,488		44,901
Operating lease cost			223,051		327,455
Short-term lease cost			450		64,787
Total lease cost		$	420,046	$	617,612

Cash paid for amounts included in the measurement of
lease liabilities
	Operating cash flows from finance leases	$	40,488	$	44,901
	Operating cash flows from operating leases		224,088		329,517
	Financing cash flows from finance leases		156,057		180,469

Weighted average remaining lease term — finance leases (Years)			2.61
Weighted average remaining lease term — operating leases (Years)			1.75
Weighted average discount rate — finance leases			8.06%
Weighted average discount rate — operating leases			8.63%



Exhibit No.	Identification of Exhibit
~~3.1~~	~~Articles of Amendment to Articles of Incorporation. (1)~~
~~3.2~~	~~Bylaws. (1)~~
~~4.1~~	~~Specimen Certificate of Common Stock (1)~~
~~10.1~~	~~Second Amended and Restated License Agreement by and between the Company and Juneau Biosciences, LLC. effective March 31, 2018 (1)~~
~~10.2~~	~~Second Amended and Restated Subscription Agreement by and between the Company and Juneau Biosciences, LLC, effective August 22, 2018 (1)~~
~~10.3~~31.1	~~Amended License Agreement between Company and Juneau Biosciences, LLC, effective August 1, 2016. (1)~~
~~10.4~~	~~Lease between the Company and Eastland Regency, L.C., dated June 30, 2017 (1)~~
~~10.5~~	~~Lease between the Company and Paradigm Resources, LC, effective June 21, 2018 (1)~~
~~10.6~~	~~Amendment No. 1 to Lease between the Company and Paradigm Resources, LC, dated October 1, 2018 (1)~~
~~10.7~~	~~Amendment No. 2 to Lease between the Company and Paradigm Resources, LC, dated October 10, 2018 (1)~~
~~10.8~~	~~Employment Contract Bradley C. Robinson (Originally filed as Exhibit 10.1 on Form 10Q Period Ended September 30, 2018) (2)~~
~~10.9~~	~~Employment Contract Paul Evans (Originally filed as Exhibit 10.2 on Form 10Q Period Ended September 30, 2018) (2)~~
~~10.10~~	~~Employment Contract Simon Brewer (Originally filed as Exhibit 10.3 on Form 10Q Period Ended September 30, 2018) (2)~~
~~10.11~~	~~Employment Contract Eric Olson (Originally filed as Exhibit 10.4 on Form 10Q Period Ended September 30, 2018) (2)~~
~~10.12~~	Amendment No.1 to the Second Amended and Restated Subscription Agreement between Juneau Biosciences, LLC and Predictive Technology Group, Inc (Originally filed as Exhibit 10.5 on Form 10Q Period Ended September 30, 2018) (2)
~~10.13~~	~~First Amended and Restated Securities Purchase Agreement between Taueret Laboratories, LLC and Predictive Technology Group, Inc. (Originally Filed as Exhibit 10.1 on Form 8-K filed 03/ 22/2019) (4)~~
~~10.14~~	~~Employment Contract with Michael Herbert~~ ~~(Originally Filed as Exhibit 10.19 on Form 10/A filed 04/ 22/2019) (5)~~
~~10.15~~	~~Securities Purchase Agreement between Predictive Technology Group, Inc and Taueret Laboratories, LLC~~ ~~(Originally filed as Exhibit 2.1 on Form 10Q Period Ended September 30, 2018) (2)~~
~~10.16~~	~~First Amendment to Securities Purchase Agreement between Predictive Technology Group, Inc and Taueret Laboratories, LLC(Originally filed as Exhibit 2.2 on Form 10Q Period Ended September 30, 2018) (2)~~
~~31.1~~	Section 302 Certification of Chief Executive Officer (filed herewith)
31.2	Section 302 Certification of Principal Financial Officer (filed herewith)
~~31.2~~32.1	Section 906 Certification of Chief Executive Officer (filed herewith)
32.2	Section 906 Certification of Principal Financial Officer (filed herewith)
101	XBRL Interactive Data Tags *



	Predictive Technology Group, Inc., (Registrant)

	By:	/s/ Bradley C. Robinson
~~May 20, 2019~~February 14, 2020		Bradley C. Robinson Chief Executive Officer and Director (Principal Executive Officer)

	By:	/s/ Simon Brewer
~~May 20, 2019~~February 14, 2020		Simon Brewer Chief Accounting Officer (Principal Accounting and Principal Financial Officer)




1.		I have reviewed this quarterly report of Predictive Technology Group, Inc. (“the registrant”) on Form 10-Q;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5.		The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.