x☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

For the transition period from _________________________ to _________________________

Indicate by check mark 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.

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).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

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).

~~Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.~~ As of November ~~14, 2017,~~11, 2020, the registrant had ~~6,282,761~~17,676,621 shares of common stock, par value ~~$.01~~$0.01 per share outstanding, adjusted for a 1-for -25 reverse stock split effective October 27, 2016 as described in Note 1 to the Condensed Financial Statements under “Nature of Operations and Continuation of Operations”. In this report all numbers of shares and per share amounts, as appropriate, have been restated to reflect the reverse stock split.outstanding.

~~SKYLINE MEDICAL~~PREDICTIVE ONCOLOGY INC.

TABLE OF CONTENTS

	Page No.
PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements	4

Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2020, and December 31, ~~2016~~2019	4

Condensed Consolidated Statements of ~~Operations and Other Comprehensive Income~~Net Loss for the three and ~~nine-month periods~~nine months ended September 30, ~~2017~~2020 and September 30, ~~2016~~2019	5

~~Statement~~Condensed Consolidated Statements of Stockholders’ Equity for the ~~Year Ended December 31, 2016~~three and ~~the nine-months~~nine months ended September 30, ~~2017~~2020 and September 30, 2019	6

Condensed Consolidated Statements of Cash Flows for the ~~nine-month periods~~nine months ended September 30, ~~2017~~2020 and September 30, ~~2016~~2019	78

Notes to Condensed Consolidated Financial Statements	89

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2629

Item 3. Quantitative and Qualitative Disclosures About Market Risk	3439

Item 4. Controls and Procedures	3439

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	3540

Item 1A. Risk Factors	3540

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3642

Item 3. Defaults Upon Senior Securities	3642

Item 4. Mine Safety Disclosures	3642

Item 5. Other Information	3642

Item 6. Exhibits	3742

Signatures	3843

Exhibit Index	3944

PART 1. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

~~SKYLINE MEDICAL~~PREDICTIVE ONCOLOGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(Unaudited)~~

September 30, 2020 December 31, 2019
(unaudited) (audited)
ASSETS
Current Assets:
Cash $ 2,474,312 $ 150,831
Accounts Receivable 508,265 297,055
Inventories 205,908 190,156
Prepaid Expense and Other Assets 269,282 160,222
Total Current Assets 3,457,767 798,264

Fixed Assets, net 3,755,464 1,507,799
Intangibles, net 3,464,327 3,649,412
Lease Right-of-Use Assets 1,790,130 729,745
Goodwill 12,693,290 15,690,290
Total Assets $ 25,160,978 22,375,510

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 1,628,944 $ 3,155,641
Notes Payable – Net of Discounts of $495,100 and $350,426 5,751,876 4,795,800
Accrued Expenses 2,530,385 2,371,633
Derivative Liability 1,052,494 50,989
Deferred Revenue 66,123 40,384
Lease Liability 577,505 459,481
Total Current Liabilities 11,607,327 10,873,928

Lease Liability – Net of current portion 1,221,806 270,264
Other long-term liabilities 95,079 -
Total Liabilities 12,924,212 11,144,192

Stockholders’ Equity:
Preferred Stock, 20,000,000 authorized inclusive of designated below
Series B Convertible Preferred Stock, $.01 par value, 2,300,000 shares authorized, 79,246 and 79,246 shares outstanding 792 792
Series D Convertible Preferred Stock, $.01 par value, 3,500,000 shares authorized, 0 and 3,500,000 outstanding - 35,000
Series E Convertible Preferred Stock, $.01 par value, 350 shares authorized, 0 and 258 outstanding - 3
Common Stock, $.01 par value, 100,000,000 shares authorized, 16,593,283 and 4,056,652 outstanding 165,932 40,567
Additional paid-in capital 108,983,174 93,653,667
Accumulated Deficit (96,913,132 ) (82,498,711 )

Total Stockholders' Equity 12,236,766 11,231,318

Total Liabilities and Stockholders' Equity $ 25,160,978 $ 22,375,510
September 30, 2017 December 31, 2016

Current Assets:
Cash and Cash Equivalents $ 765,704 $ 1,764,090
Certificates of Deposit 1,224,728 100,000
Marketable Securities - 284,329
Accounts Receivable 91,708 38,919
Notes Receivable (Note 3) 785,000 -
Inventories 238,889 272,208
Prepaid Expense and other assets 196,825 148,637
Total Current Assets 3,302,854 2,608,183

Fixed Assets, net 99,982 101,496
Intangibles, net 96,501 97,867

Total Assets $ 3,499,337 $ 2,807,546

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 74,642 $ 220,112
Accrued Expenses 1,132,613 1,346,105
Deferred Revenue 10,185 7,998
Total Current Liabilities 1,217,440 1,574,215

Accrued Expenses - 309,649
Total Liabilities 1,217,440 1,883,864
Commitments and Contingencies - -
Stockholders’ Equity:
Series B Convertible Preferred Stock, $.01 par value, 20,000,000 authorized, 79,246 and 79,246 outstanding 792 792
Common Stock, $.01 par value, 24,000,000 authorized, 6,232,761 and 4,564,428 outstanding 62,327 45,644
Additional paid-in capital 54,114,771 47,894,196
Accumulated Deficit (51,895,993 ) (47,018,451 )
Accumulated Other Comprehensive Income - 1,501
Total Stockholders' Equity 2,281,897 923,682

Total Liabilities and Stockholders' Equity $ 3,499,337 $ 2,807,546

See Notes to Condensed Consolidated Financial Statements

4

~~SKYLINE MEDICAL~~PREDICTIVE ONCOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS and OTHER COMPREHENSIVE INCOME~~NET LOSS
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenue $ 480,757 $ 522,696 $ 958,484 $ 1,064,088
Cost of goods sold 175,206 208,096 353,124 400,202
Gross margin 305,551 314,600 605,360 663,886

General and administrative expense 2,226,634 2,616,991 8,266,927 7,425,305
Operations expense 568,766 707,414 1,638,635 2,445,238
Sales and marketing expense 121,514 434,955 518,938 1,674,200
Loss on goodwill impairment 2,997,000 - 2,997,000 -
Total operating loss (5,608,363 ) (3,444,760 ) (12,816,140 ) (10,880,857 )

Gain on revaluation of cash advances to Helomics - - - 1,222,244
Other income 44,926 15,084 97,894 65,293
Other expense (2,147,057 ) (894,811 ) (3,993,969 ) (2,052,522 )
Gain on derivative instruments 1,402,768 315,975 1,007,794 84,627
Gain on notes receivables associated with asset purchase - - 1,290,000 -
Loss on equity method investment - - - 439,637
Gain on revaluation of equity method in investment - - - 6,164,260
Net loss $ (6,307,726 ) $ (4,008,512 ) $ (14,414,421 ) $ (5,836,592 )
Deemed dividend 554,287 125,801 554,287 146,199
Net loss attributable to common shareholders per common shares-basic and diluted $ (6,862,013 ) $ (4,134,313 ) $ (14,968,708 ) $ (5,982,791 )
Loss per common share basic and diluted $ (0.46 ) $ (1.31 ) $ (1.51 ) $ (2.32 )
Weighted average shared used in computation – basic and diluted 15,026,789 3,146,609 9,935,738 2,581,014
Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenue $ 152,535 $ 134,605 $ 434,523 $ 316,931

Cost of goods sold 28,706 26,481 87,709 149,130

Gross margin 123,829 108,124 346,814 167,801

General and administrative expense 621,716 733,074 3,968,493 4,684,130

Operations expense 192,536 292,856 575,467 928,062

Sales and marketing expense 301,672 137,784 680,396 348,848

Interest expense - 3 - 3

Total Expense 1,115,924 1,163,717 5,224,356 5,961,043

Net loss available to common shareholders (992,095 ) (1,055,593 ) (4,877,542 ) (5,793,242 )

Other comprehensive gain
Unrealized gain from marketable securities - (1,299 ) - 4,579

Comprehensive (loss) $ (992,095 ) $ (1,056,892 ) $ (4,877,542 ) $ (5,788,663 )

Loss per common share - basic and diluted $ (0.16 ) $ (0.32 ) $ (0.78 ) $ (2.57 )

Weighted average shares used in computation - basic and diluted 6,232,761 3,320,139 6,283,567 2,250,315

See Notes to Condensed Consolidated Financial Statements

5

~~SKYLINE MEDICAL~~PREDICTIVE ONCOLOGY INC.
~~STATEMENT~~CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~STOCKHOLDERS’ EQUITY
~~(UNAUDITED)~~FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2020 AND 2019
(Unaudited)

Common Stock
Preferred
Stock Shares Amount Paid-in
Capital Deficit Accumulated
Other
Comprehensive
Income Total
Balance at 12/31/2015 $ 18,950 208,259 $ 2,080 $ 44,584,118 $ (40,492,437 ) - $ 4,112,711
Shares issued for two options exercised at $65.75 per share 1,312 13 86,240 86,253
Shares issued for preferred stock conversion into common stock per the break-up of the Unit from the 2015 public offering (18,158 ) 66,396 664 17,494 -
Shares issued for cashless Series A warrant exercises per the break-up of the Unit from the 2015 public offering 2,318,663 23,187 556,479 579,666
Shares issued for cashless Series B warrant exercises per the tender offer exchange 628,237 6,282 150,777 157,059
Shares issued at $3.75 per share, to an investment banker per contractual agreement 135,995 1,360 508,620 509,980
Shares issued at $4.50 per share to former CEO per severance agreement 20,000 200 90,151 90,351
Vesting Expense 165,271 165,271
Unrealized gain from marketable securities 1,501 1,501
Shares issued at $4.50 per share to investor relations consultant 26,000 260 116,740 117,000
Shares issued for escrow with GLG Pharma pursuant to the partnership and reseller agreement 400,000 4,000 4,000
Shares issued pursuant to the Registered Direct Offering, net 756,999 7,570 1,618,335 1,625,905
Corrections due to rounding for reverse split and DTCC increase 2,567 28 (29 ) (1 )
Net loss (6,526,014 ) (6,526,014 )
Balance @ 12/31/2016 $ 792 4,564,428 $ 45,644 $ 47,894,196 $ (47,018,451 ) $ 1,501 $ 923,682
Shares issued pursuant to the public offering, net 1,750,000 17,500 3,403,688 3,421,188
Shares issued pursuant to the overallotment agreement in the public offering 175,000 1,750 392,000 393,750
Vesting Expense 2,142,189 2,142,189
Reverse shares issued for escrow with GLG Pharma pursuant to termination agreement (400,000 ) (4,000 ) (4,000 )
Shares issued pursuant to consulting agreement 100,000 1,000 219,000 220,000
Unrealized gain (loss) from marketable securities (1,501 ) (1,501 )
Shares issued pursuant to consulting agreement 43,333 433 63,699 64,132
Net loss (4,877,542 ) (4,877,542 )
Balance @ 9/30/2017 $ 792 6,232,761 $ 62,327 $ 54,114,771 $ (51,895,993 ) $ - $ 2,281,897

Series B Preferred Series D Preferred Series E Preferred Common Stock Additional Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Total
Balance at 12/31/2019 79,246 $ 792 3,500,000 $ 35,000 258 $ 3 4,056,652 $ 40,567 $ 93,653,667 $ (82,498,711 ) $ 11,231,318
Shares issued pursuant to CEO exchange agreement 50,000 500 129,500 130,000
Inducement shares issued pursuant to promissory note extension 30,000 300 40,950 41,250
Issuance of shares and prefunded warrants pursuant to March 2020 private placement 260,000 2,600 455,223 457,823
Inducement shares issued pursuant to 2020 convertible debt and warrants 46,875 468 119,532 120,000
Warrants issued pursuant to 2020 convertible debt 116,951 116,951
Shares issued pursuant to note conversions - bridge loan 170,000 1,700 265,628 267,328
Shares issued pursuant to series E preferred stock conversions (50 ) (1 ) 141,191 1,412 (1,411 ) -
Shares issued pursuant to Equity Line 943,000 9,430 1,860,469 1,869,899
Shares issued to consultant and other 155,000 1,550 360,750 362,300
Vesting expense 287,838 287,838
Net loss (4,529,317 ) (4,529,317 )
Balance at 03/31/2020 79,246 $ 792 3,500,000 $ 35,000 208 $ 2 5,852,718 $ 58,527 $ 97,289,097 $ (87,028,028 ) $ 10,355,390
Warrants issued pursuant to 2020 convertible debt 62,373 62,373
Shares issued pursuant to CEO note conversion and accrued interest and exchange agreement 1,533,481 15,335 2,177,543 2,192,878
Shares issued pursuant to series E preferred stock conversions (208 ) (2 ) 1,257,416 12,574 (12,572 ) -
Shares issued pursuant to series D preferred stock conversions (3,500,000 ) (35,000 ) 350,004 3,500 31,500 -
Issuance of shares from prefunded warrant exercises 1,390,166 13,902 (13,148 ) 754
Issuance of shares pursuant to May 2020 offering, net 1,396,826 13,968 591,949 605,917
Shares issued in connection with asset purchase agreement 115,000 1,150 185,150 186,300
Exercise of warrants and issuance of new warrants June 2020, net 1,274,826 12,748 1,682,237 1,694,985
Director compensation 20,350 204 34,796 35,000
Vesting expense 134,939 134,939
Net Loss (3,577,378 ) (3,577,378 )
Balance at 06/30/20 79,246 $ 792 - $ - - $ - 13,190,787 $ 131,908 $ 102,163,864 $ (90,605,406 ) $ 11,691,158
Shares issued in connection with asset purchase agreement 954,719 9,547 1,460.720 1,470,267
Repricing and Reclassification of warrants issued pursuant to convertible debt 1,865,953 1,865,953
Repricing and Reclassification of June 2020 warrants 803,455 803,455
Exercise of warrants 122,000 1,220 190,930 192,150
Share issuance to consultant and other 2,669 26 3,005 3,031
Shares issued pursuant to Equity Line 2,307,000 23,070 2,336,733 2,359,803
Director Compensation 16,108 161 23,839 24,000
Vesting expense and option repricing 134,675 134,675
Net loss (6,307,726 ) (6,307,726 )
Balance at 09/30/20 79,246 $ 792 - $ - - $ -
16,593,283
$ 165,932 $ 108,983,174 $ (96,913,132 ) $ 12,236,766

See Notes to Condensed Consolidated Financial Statements

6

~~SKYLINE MEDICAL~~PREDICTIVE ONCOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY
(Unaudited)

Nine Months Ended
September 30,
2017 2016
Cash flow from operating activities:
Net loss $ (4,877,542 ) $ (5,793,242 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 53,831 62,427
Vested stock options and warrants 2,142,189 147,158
Equity instruments issued for management and consulting 280,133 717,331
Issuance of common stock in cashless warrant exercise - 736,724
Loss on Sales of Equipment - (2,387 )
Gain from sale of marketable securities (1,837 ) (2,309 )
Changes in assets and liabilities:
Accounts receivable (52,789 ) (6,734 )
Inventories 33,319 (57,509 )
Prepaid expense and other assets (48,188 ) 108,391
Accounts payable (145,470 ) (2,352 )
Accrued expenses (523,142 ) 388,195
Deferred Revenue 2,187 -
Net cash provided in operating activities: (3,137,309 ) (3,704,307 )
Cash flow from investing activities:
Purchase of marketable securities - (850,000 )
Proceeds from sale of marketable securities 284,665 280,000
Purchase of certificates of deposit (2,594,728 ) (1,000,000 )
Redemption of certificates of deposit 1,470,000 1,000,000
Advances of notes receivable (785,000 ) -
Purchase of fixed assets (43,251 ) (25,127 )
Purchase of intangibles (7,701 ) (8,573 )
Net cash used in investing activities: (1,676,015 ) (603,700 )

Cash flow from financing activities:
Issuance of common stock 3,814,938 86,253
Net cash provided by financing activities 3,814,938 86,253

Net increase (decrease) in cash (998,386 ) (4,221,754 )
Cash at beginning of period 1,764,090 4,856,232
Cash at end of period $ 765,704 $ 634,478
Series B Preferred Series D Preferred Series E Preferred Common Stock Additional Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Total
Balance at 12/31/2018 79,246 $ 792 $ - $ - 1,409,175 $ 14,092 $ 63,146,533 $ (63,107,945 ) $ 53,472
Investment by CEO 7,813 78 49,922 50,000
Shares issued in forbearance agreement 16,667 166 158,183 158,349
Shares issued pursuant to S-3 public offering 286,375 2,864 2,426,845 2,429,709
Shares issued pursuant to note conversions 15,985 160 89,840 90,000
Warrants issued pursuant to CEO note payable 318,058 318,058
Vesting expense 263,600 263,600
Net loss (3,293,184 ) (3,293,184 )
Balance at 03/31/2019 79,246 $ 792 - $ - - $ - 1,736,015 $ 17,360 $ 66,452,982 $ (66,401,129 ) $ 70,005
Shares issued pursuant to note conversions 39,873 399 148,173 148,572
Stock issued to extinguish debt as part of Helomics purchase consideration 863,732 8,637 6,454,672 6,463,309
Warrants issued pursuant to CEO note payable 23,550 23,550
Stock issued for Helomics acquisition 3,500,000 35,000 400,000 4,000 5,573,250 5,612,250
Issuance of warrants as Helomics purchase consideration 6,261,591 6,261,591
Exercise of warrants 57,856 579 5,207 5,786
Issuance of Series E Preferred shares 84 1 743,559 743,560
Issuance of Noteholders’ warrants 117,241 117,241
Vesting expense 1,380,620 1,380,620
Net income 1,465,104 1,465,104
Balance at 06/30/19 79,246 $ 792 3,500,000 $ 35,000 84 $ 1 3,097,476 $ 30,975 $ 87,160,845 $ (64,936,025 ) $ 22,291,588
Shares issued pursuant to note conversions 26,573 266 99,734 100,000
Shares issued pursuant to bridge loan agreement 23,858 238 119,136 119,374
Warrants issued pursuant to CEO note payable 14,863 14,863
Exercise of warrants 1,844 18 166 184
Issuance of Series E Preferred shares 174 2 1,595,278 1,595,280
Expense warrants for note extension 60,100 60,100
Warrants issued pursuant to promissory note 180,640 180,640
Vesting expense 360,146 360,146
Net loss (4,008,512 ) (4,008,512 )
Balance at 09/30/19 79,246 $ 792 3,500,000 $ 35,000 258 $ 3 3,149,751 $ 31,497 $ 89,590,908 $ (68,944,537 ) $ 20,713,663

See Notes to Condensed Consolidated Financial Statements

7

PREDICTIVE ONCOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
2020 2019
Cash flow from operating activities:
Net loss $ (14,414,421 ) $ (5,836,592 )
Adjustments to reconcile net loss to net cash used in operating activities:
Recognition of credit loss on notes receivable - 787,524
Accrued interest revenue - (34,917 )
Loss on equity method investment - 439,637
Gain on revaluation of equity method investment - (6,164,260 )
Gain on note receivable in connection with asset purchase (1,290,000 ) -
Depreciation and amortization 716,595 483,631
Vesting expense 557,452 2,004,366
Equity instruments issued for management, consultant, and other 424,331 -
Amortization of debt discount 996,271 1,621,181
Loss on valuation of equity-linked instruments and derivative liability (1,007,794 ) (84,627 )
Gain on revaluation of cash advances to Helomics - (1,222,244 )
Debt extinguishment costs 1,996,681 204,750
Equity instruments issued in connection with 2020 convertible debt 20,695 -
Loss on goodwill impairment 2,997,000 -
Loss on fixed asset disposal 120,577 293

Changes in assets and liabilities:
Accounts receivable (122,003 ) 68,252
Inventories (15,752 ) 60,638
Prepaid expense and other assets (109,060 ) 33,834
Accounts payable (1,438,033 ) 942,183
Accrued expenses 587,937 751,975
Deferred revenue 25,739 7,573
Net cash used in operating activities: (9,953,785 ) (5,936,803 )

Cash flow from investing activities:
Advance on notes receivable - (975,000 )
Cash received from notes receivable - 154,418
Cash received in Helomics Acquisition - 248,102
Acquisition of fixed assets (114,180 ) -
Proceeds from asset sales 133,850 (855 )
Acquisition of intangibles (45,862 ) (18,419 )
Net cash used in investing activities: (26,192 ) (591,754 )

Cash flow from financing activities:
Proceeds from debt issuance 2,761,867 2,250,000
Proceeds from exercise of warrants into common stock 1,935,854 5,970
Proceeds from issuance of Series E convertible preferred stock - 2,338,840
Repayment of debt (1,459,973 ) (609,514 )
Payment penalties (247,327 ) -
Proceeds from issuance of common stock pursuant to equity line 4,229,702 -
Issuance of common stock, A, B and prefunded warrants, net 5,057,919 2,479,708
Other financing (security deposit) 25,416 -
Net cash provided by financing activities 12,303,458 6,465,004

Net increase (decrease) in cash and cash equivalents 2,323,481 (63,553 )
Cash at beginning of period 150,831 162,152
Cash at end of period $ 2,474,312 $ 98,599
Non-cash transactions:
Consideration given for acquisition of Helomics $ - $ 26,711,791
Forbearance settlement of bridge loan - 503,009
Bridge loan conversion into common stock 267,328 338,573
Shares issued pursuant to CEO note conversion and accrued interest
and exchange agreement 2,322,878 -
Fixed assets acquired for notes receivable and common stock 1,492,500 -
Fixed asset acquired for common stock 1,470,267 -
Increase to operating lease right of use asset and lease liability due to new and modified leases 1,417,076 -
Put and conversion derivative from debt issuance and modification 636,563
Warrants issued pursuant to debt issuance 179,324 180,640
Inducement shares issued pursuant to debt 140,555 -
Series D preferred stock conversions 35,000 -
Additional warrants issued pursuant to CEO note payable - 47,078
Fixed assets sold for accounts receivable
89,207
-
Series E preferred stock conversion 3 -
See Notes to Condensed Consolidated Financial Statements
8
~~SKYLINE MEDICAL~~PREDICTIVE ONCOLOGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~(Amounts presented at and for the three and nine months ended September 30, 2017 and September 30, 2016 are unaudited)~~(Unaudited)

NOTE 1 —– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Continuance of Operations

~~Skyline~~Predictive Oncology Inc. (the “Company”) was originally incorporated on April 23, 2002 in Minnesota as BioDrain Medical, Inc. ~~(the "Company") was incorporated under the laws of the State of Minnesota in 2002.~~ Effective August 6, 2013, the Company changed its name to Skyline Medical Inc. As of September 30, 2017, the registrant had 6,232,761 shares of common stock, par value $.01 per share, outstanding, adjusted for a 1-for-25 reverse stock split effective October 27, 2016. In this Report, all numbers of shares and per share amounts, as appropriate, have been stated to reflect the reverse stock split. Pursuant to an Agreement and Plan of Merger ~~dated~~ effective December 16, 2013, the Company merged with and into a Delaware corporation with the same name that was its ~~wholly-owned~~wholly owned subsidiary, with such Delaware corporation as the surviving corporation of the merger. On August 31, 2015, the Company completed a successful offering and concurrent uplisting to the NASDAQ Capital Market. On February 1, 2018, the Company filed with the Secretary of State of Delaware a Certificate of Amendment to its Certificate of Incorporation to change the corporate name from Skyline Medical Inc. to Precision Therapeutics Inc., effective February 1, 2018. Because of this change, the Company’s common stock traded under the ticker symbol “AIPT,” effective February 2, 2018. On June 10, 2019, the Company filed with the Secretary of State of Delaware a Certificate of Amendment to its Certificate of Incorporation to change the corporate name from Precision Therapeutics Inc. to Predictive Oncology Inc., trading under the new ticker symbol “POAI,” effective June 13, 2019. Skyline Medical (“Skyline”) remains as an incorporated division of Predictive Oncology Inc. On October 28, 2019, the Company completed a one-for-ten reverse stock split that was effective for trading purposes on October 29, 2019. All numbers of shares and per-share amounts in this report have been adjusted to reflect the reverse stock split.
The Company ~~has developed~~is a healthcare company that provides personalized medicine solutions and medical devices in two main areas: (1) precision medicine, which aims to apply artificial intelligence to personalized medicine and drug discovery, primarily through its wholly owned subsidiary Helomics Holding Corporation (“Helomics”) and (2) an ~~environmentally safe~~environmentally-safe system for the collection and disposal of infectious fluids that result from surgical procedures and post-operative care. The Company ~~also makes ongoing sales of our~~sells proprietary cleaning fluid and filters to users of ~~our~~its systems.
In ~~April 2009,~~addition, the Company’s wholly owned subsidiary, TumorGenesis Inc. (“TumorGenesis”), is developing the next generation, patient-derived tumor models for precision cancer therapy and drug development. TumorGenesis is presented as part of the condensed consolidated financial statements and is included in corporate in the Company’s segment reporting.
During the first quarter of 2018, the Company ~~received 510(k) clearance from~~acquired 25% of the ~~FDA to authorize~~capital stock of Helomics Holding Corporation (“Helomics”). On April 4, 2019, the Company ~~to market~~completed a forward triangular merger with Helomics Acquisition Inc., a wholly owned subsidiary of the Company and ~~sell its STREAMWAY® SYSTEM products.~~Helomics, acquiring the remaining 75% of the capital stock of Helomics.

The Company has incurred recurring losses from operations and has an accumulated deficit of $96,913,132 at September 30, 2020. The Company does not expect to generate sufficient operating revenue to sustain its operations in the near-term. During fiscal year 2019 and the nine months ended September 30, 2020, the Company incurred negative cash flows from operations. Although the Company has attempted to curtail expenses, there is no guarantee that the Company will be able to reduce these expenses significantly, and expenses may need to be higher to prepare product lines for broader sales in order to generate sustainable revenues. These conditions raise substantial doubts about the Company’s ability to continue as a going concern. The Company had cash and cash equivalents of $2,474,312 as of September 30, 2020 and needs to raise significant additional capital to meet its operating needs and pay debt obligations coming due. Outstanding debt, including accrued interest and penalties, totaled $7,872,542 as of September 30, 2020, all of which is due within six months. Debt is secured by all assets of the Company and its subsidiaries. The Company intends to raise these funds through equity or debt financing that may include public offerings, private placements, alternative offerings, or other means. In October 2019, the Company entered into a purchase agreement for an equity line under which it can raise up to $15,000,000 over a three-year period, subject to market conditions including trading volume and stock price. As of September 30, 2020, there was $10,451,105 remaining available balance under the equity line, subject to market conditions including trading volume and stock price, and subject to other limitations. Given the limitations in place, there is no guarantee that the Company will be able to raise the full amount available under the equity line over the course of the three-year period. In nine months ended September 30, 2020, the Company completed various debt, equity and other financing activities and raised net proceeds of $12,303,458, net of repayments. Despite these sources of funding, it is not probable the Company will be able to obtain additional financing in order to fund operations. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going ~~concern. The Company has suffered recurring losses from operations~~concern and had a stockholders’ deficit until August 31, 2015 whereupon the Company closed its public offering of units consisting of common stock, Series B Convertible Preferred Stock and Series A Warrants (the “Units”). There remains though, substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Since inception to September 30, 2017, the Company raised approximately $27,765,934 in equity, inclusive of $2,055,000 from a private placement of Series A Convertible Preferred Stock, $13,555,003 from the public offering of Units completed in 2015, $1,739,770 from a registered direct offering completed in 2016, $3,421,188 from the public offering of Units completed in the first quarter of 2017, $358,312 from the underwriter exercising their option to purchase up to 175,000 additional shares of common stock and to acquire additional warrants to purchase up to 35,000 additional shares of common stock, and $5,685,000 in debt financing. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”
On August 9, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Skyline Cyto Acquisition, Inc. and CytoBioscience, Inc. (“CytoBioscience”). CytoBioscience creates and manufactures devices used in human cell research focused on new therapeutic drug development and has a well-known scientific and technical staff, collaborative partnerships with leading pharmaceutical companies and strategic alliances with key groups and academic institutions. The Merger Agreement contemplated a reverse triangular merger with CytoBioscience becoming a wholly owned operating subsidiary of the Company (the “Merger”). In November 2017, the Company and CytoBioscience announced that they terminated the Merger Agreement to focus on structuring a proposed joint venture to market CytoBioscience’s personalized research services.
~~Recent Accounting Developments~~
~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ ~~and created a new topic in the FASB Accounting Standards Codification ("ASC"), Topic 606, and has since amended the standard with ASU 2015-14,~~ ~~“Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net),”~~ ~~ASU 2016-10,~~ ~~“Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing,”~~ ~~and ASU 2016-12,~~ ~~“Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients.”~~ These new standards provide a single comprehensive revenue recognition framework for all entities and supersede nearly all existing U.S. GAAP revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries and also requires enhanced disclosures. The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permitted. The FASB allows two adoption methods under ASC 606. We currently plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to all contracts existing as of January 1, 2018, recognizing in the beginning retained earnings an adjustment for the cumulative effect of the change and providing additional disclosure comparing results to previous accounting standards. Upon initial evaluation, we believe the requirements of this standard will not result in a significant change to our results.
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~~In June 2014, the FASB issued ASU 2014-12,~~ ~~"Compensation - Stock Compensation"~~ providing explicit guidance on how to account for share-based payments granted to employees in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments in this update are effective.
~~In August 2014, the FASB issued ASU 2014-15,~~ ~~Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern~~. The new standard requires management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The standard is effective for public entities for annual and interim periods beginning after December 15, 2016, with early adoption permitted. We implemented in the first quarter of 2017.
~~In April 2015, the FASB issued ASU 2015-03,~~ ~~Simplifying the Presentation of Debt Issuance Costs~~. Debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts, rather than as an asset. Amortization of these costs will continue to be reported as interest expense. ASU 2015-03 is effective.
~~In July 2015, the FASB issued ASU No. 2015-11~~~~, Inventory (Topic 330): Simplifying the Measurement of Inventory~~, requiring that inventory be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU is effective within annual periods beginning on or after December 15, 2016, including interim periods within that reporting period. This ASU is implemented.
~~In November 2015, the FASB issued ASU 2015-17,~~ ~~“Income Taxes (Topic 740)”~~ providing guidance on the balance sheet classification of deferred taxes. The guidance requires that deferred tax assets and liabilities to be classified as noncurrent in the Balance Sheet. The guidance is effective for fiscal years beginning after December 15, 2016 and for interim periods within those fiscal years, with early adoption permitted. This ASU is implemented.
~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~“Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”~~ (“ASU 2016-01”). The standard changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. Under the new guidance, entities will be required to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not believe that the adoption of this guidance will have a material impact on the Company’s financial statements and disclosures.
~~In February 2016, the FASB issued ASU No. 2016-02, “~~~~Leases (Topic 842)~~” (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating the timing of our adoption and the impact that the updated standard will have on our financial statements.
~~In March 2016, the FASB issued ASU No. 2016-09, “~~~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accountin~~g” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. Early adoption is permitted. This ASU is implemented.

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~~During August 2016,~~Coronavirus Outbreak
In March 2020, the ~~FASB issued ASU No. 2016-15,~~ ~~“Statement~~World Health Organization declared the recent spread of ~~Cash Flows (Topic 230): Classification~~COVID-19 to be a global pandemic. In response to the crisis, emergency measures have been imposed by governments worldwide, including mandatory social distancing and the shutdown of ~~Certain Cash Receipts~~non-essential businesses. These measures have adversely impacted the global economy, disrupted global supply chains and ~~Cash Payments”,~~ created significant volatility and disruption of financial markets. While it is not currently possible to ~~address diversity in how certain cash receipts~~estimate the duration and cash payments are presented and classified in the statements of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. If retrospective application is impractical for someseverity of the ~~issues addressed by~~COVID-19 pandemic or the update, the amendments for those issues would be applied prospectively as of the earliest date practicable. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2016-15 to have a materialadverse economic impact ~~on its financial statements.~~
~~We reviewed all other significant newly issued accounting pronouncements and determined they are either not applicable to~~resulting therefrom, our business ~~or that no material effect~~and operations have been and will likely continue to be materially and adversely affected. For example, our contract manufacturer for the STREAMWAY® System has been forced to change locations, thereby delaying our order fulfillment for parts. We have also reduced on-site staff at several of our facilities, resulting in delayed production, less efficiency, and our sales staff is ~~expected on~~unable to visit with hospital administrators who are our customers and potential customers. In addition, COVID-19 has impacted the Company’s capital and financial resources, including our overall liquidity position and ~~results of~~outlook. For instance, our ~~operations.~~
~~Valuation of Intangible Assets~~
~~We review identifiable intangible assets~~accounts receivable has slowed while our suppliers continue to ask for ~~impairment in accordance with ASC 350 — Intangibles —Goodwill and Other, whenever events or changes in circumstances indicate~~pre-delivery deposits. Although we have received a Paycheck Protection Loan pursuant to the ~~carrying amount~~CARES Act which has helped fund some payroll costs, we may not be ~~recoverable. Our intangible assets are currently solely~~able to access necessary additional capital given the ~~costs~~current condition of ~~obtaining trademarks and patents. Events~~the financial markets. Further, there is no assurance that we will be able to obtain forgiveness of this loan. Thus, if COVID-19 continues to spread or ~~changes in circumstances that indicate~~ the ~~carrying amount~~response to contain the virus is unsuccessful, we may ~~not be recoverable include, but are not limited~~continue to experience a ~~significant change in the medical device marketplace and a significant~~material adverse ~~change in the~~effect on our business, ~~climate in which we operate. If such events or changes in circumstances are present, the undiscounted~~financial condition, results of operations, cash flows ~~method is used to determine whether the intangible asset is impaired. Cash flows would include the estimated terminal value of the asset~~ and exclude any interest charges. If the carrying value of the asset exceeds the undiscounted cash flows over the estimated remaining life of the asset, the asset is considered impaired, and the impairment is measured by reducing the carrying value of the asset to its fair value using the discounted cash flows method. The discount rate utilized is based on management’s best estimate of the related risks and return at the time the impairment assessment is made.stock price.

~~Accounting Policies and Estimates~~Interim Financial Statements

The ~~presentation of~~Company has prepared the condensed consolidated financial statements and related unaudited financial information in ~~conformity~~the footnotes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim condensed consolidated financial statements. These interim condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which in the opinion of management, are necessary to present fairly the Company’s position, the results of its operations, and its cash flows for the interim periods. These interim condensed consolidated financial statements reflect all intercompany eliminations. These interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto contained in the Annual Report on Form 10-K filed with the SEC on April 1, 2020. The nature of the Company’s business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.
Accounting Policies and Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and ~~liabilities~~expenses and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements ~~and the reported amounts of revenues and expenses~~ during the reporting period. Actual results could materially differ from those estimates.

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~~Presentation of Taxes Collected from Customers~~
Sales taxes are imposed on the Company’s sales to nonexempt customers. The Company collects the taxes from customers and remits the entire amounts to the governmental authorities. The Company’s accounting policy is to exclude the taxes collected and remitted from revenues and expenses.
~~Shipping and Handling~~
~~Shipping and handling charges billed to customers are recorded as revenue. Shipping and handling costs are recorded within cost of goods sold on the statement of operations.~~
~~Advertising~~
Advertising costs are expensed as incurred. Advertising expenses were $7,230 and $28,910 in the three and nine months ended September 30, 2017 and were $10,343 and $57,004 in the three and nine months ended September 30, 2016, respectively.
~~Research and Development~~
Research and development costs are charged to operations as incurred. Research and development expenses were $69,499 and $223,958 in the three and nine months ended September 30, 2017 and were $79,936 and $302,330 in the three and nine months ended September 30, 2016, respectively.
~~Revenue Recognition~~
~~The Company recognizes revenue in accordance with the SEC’s Staff Accounting Bulletin Topic 13 Revenue Recognition and ASC 605-Revenue Recognition.~~
Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable and collectability is probable. Delivery is considered to have occurred upon either shipment of the product or arrival at its destination based on the shipping terms of the transaction. The Company’s standard terms specify that shipment is FOB Skyline and the Company will, therefore, recognize revenue upon shipment in most cases. This revenue recognition policy applies to shipments of the STREAMWAY SYSTEM units as well as shipments of filters and fluids. When these conditions are satisfied, the Company recognizes gross product revenue, which is the price it charges generally to its customers for a particular product. Under the Company’s standard terms and conditions, there is no provision for installation or acceptance of the product to take place prior to the obligation of the customer. The customer’s right of return is limited only to the Company’s standard one-year warranty whereby the Company replaces or repairs, at its option, and it would be rare that the STREAMWAY SYSTEM unit or significant quantities of cleaning solution or filters may be returned. Additionally, since the Company buys the STREAMWAY SYSTEM units, cleaning solution and filters from “turnkey” suppliers, the Company would have the right to replacements from the suppliers if this situation should occur.
~~Cash Equivalents~~
The Company considers all highly liquid debt instruments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value.
~~Certificates of Deposit~~
Short-term interest-bearing investments are those with maturities of less than one year but greater than three months when purchased. Certificates with maturity dates beyond one year are classified as noncurrent assets. These investments are readily convertible to cash and are stated at cost plus accrued interest, which approximates fair value.
~~Investment Securities~~
Readily marketable investments in debt and equity securities are classified as available-for-sale and are reported at fair value with unrealized gains and losses recorded in other comprehensive income. Unrealized gains are charged to earnings when an incline in fair value above the cost basis is determined to be other-than-temporary. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the securities sold, using the specific identification method.
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Fair Value Measurements

~~Under generally accepted accounting principles as~~As outlined in ~~the Financial Accounting Standards Board’s~~ASC – 820, ~~Accounting Standards Codification~~ Fair Value Measurement~~(ASC) 820,~~, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting ~~standards~~standard ASC 820 establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

Level 1 – Observable inputs such as quoted prices in active markets;

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Level 2 – Inputs other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3 – Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

The Company uses observable market data, when available, in making fair value measurements. Fair value measurements are classified according to the lowest level input that is significant to the valuation.

The fair value of the Company’s investment securities, which consist of cash and cash equivalents, was determined based on Level 1 inputs.
~~Receivables~~
~~Receivables are reported at~~ The fair values of the ~~amount the Company expects to collect on balances outstanding. The Company provides for probable uncollectible amounts through charges to earnings and credits to the valuation~~Company’s derivative liabilities were determined based on ~~management’s assessment~~Level 3 inputs. See Note 8 – Derivatives. The fair values of the ~~current status of individual accounts, changes to the valuation allowance have not been material to the financial statements.~~Company’s notes payable were determined based on Level 2 inputs. See Note 6 – Notes Payable.

Inventories

Inventories are stated at the lower of cost or ~~market,~~net realizable value, with cost determined on a first-in, first-out basis. ~~Inventory balances are as follows:~~
September 30,
2017 December 31,
2016

Finished goods $ 28,441 $ 38,201
Raw materials 163,295 165,812
Work-In-Process 47,153 68,195
Total $ 238,889 $ 272,208
~~Property and Equipment~~

~~Property and equipment~~Fixed Assets
Fixed assets are stated at cost less accumulated ~~depreciation and amortization.~~depreciation. Depreciation of ~~property and equipment~~fixed assets is computed using the straight-line method over the estimated useful lives of the respective assets. Estimated useful asset life by classification is as follows:

Years Years
Computers and office equipment 3 - 7
Computers, software and office equipment 3 - 10
Leasehold improvements(1) 5 5
Manufacturing tooling 3 - 7 3 - 7
Demo Equipment 3
Laboratory equipment 4 - 6
Demo equipment 3

12(1) Leasehold improvements are depreciated over the shorter of the useful life or the remaining lease term.
~~The Company’s investment in Fixed Assets consists of the following:~~
September 30,
2017 December 31,
2016
Computers and office equipment $ 182,686 $ 164,318
Leasehold improvements 25,635 25,635
Manufacturing tooling 107,955 103,204
Demo equipment 43,367 23,236
Total 359,643 316,393
Less: Accumulated depreciation 259,661 214,897
Total Fixed Assets, Net $ 99,982 $ 101,496

Upon retirement or sale of fixed assets, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations expense as incurred.

~~Depreciation expense was $14,561~~
Long-lived Assets
Finite-lived intangible assets consist of patents and ~~$44,764~~trademarks, licensing fees, developed technology, and customer relationships, and are amortized over their estimated useful life. Accumulated amortization is included in intangibles, net in the ~~three~~accompanying consolidated balance sheets.
The Company reviews finite-lived identifiable intangible assets for impairment in accordance with ASC 360 — Property, Plant and ~~nine months ended~~Equipment, whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Events or changes in circumstances that indicate the carrying amount may not be recoverable include, but are not limited to, a significant change in the medical device marketplace and a significant adverse change in the business climate in which the Company operates.
The tradename was an indefinite-lived intangible asset and was not amortized during third quarter of 2020. The Company reviews its other intangible assets in accordance with ASC 350—Intangibles—Goodwill and Other. Under this topic, intangible assets determined to have an indefinite useful life are not amortized but are tested for impairment annually or more often if an event or circumstances indicate that an impairment loss has been incurred. Our impairment testing as of December 31, 2019 resulted in $770,250 of impairment charges to our intangible assets.
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Given the decrease in the Company's market capitalization from June 30, 2020, the Company determined that potential impairment indicators were present and that an impairment assessment was warranted for long-lived assets. In evaluating tradename, estimated fair values were determined using discounted cash flows and implied royalty rates. Based on the results of the tradename assessments, the Company concluded that the fair values of the tradename exceeded the carrying values. The Company concluded there was no impairment of its intangible assets as of September 30, ~~2017,~~2020.
As a part of the Company’s review of the tradename intangible asset associated with its Helomics operating segment, the Company has determined the asset is a finite lived asset. The useful life of the tradename has a useful life of eighteen and one—half years beginning September 30, 2020.
In evaluating other long-lived assets, the Company prepared the undiscounted cash flows per ASC 360. The Company concluded that the undiscounted cash flows of the long-lived assets exceeded the carrying values. The Company concluded there was ~~$17,782~~no impairment of its finite lived assets as of September 30, 2020.
Goodwill
In accordance with ASC 350 – Intangibles – Goodwill and ~~$56,202~~Other, goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of net assets acquired. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination. Goodwill is an indefinite-lived asset and is not amortized. Goodwill is tested for impairment annually at the reporting unit level or whenever events or circumstances present an indication of impairment.
To determine whether goodwill is impaired, annually or more frequently if needed, the Company performs a multi-step impairment test. The Company first has the option to assess qualitative factors to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. The Company may also elect to skip the qualitative testing and proceed directly to the quantitative testing. When performing quantitative testing, the Company first estimates the fair values of its reporting units using discounted cash flows. To determine fair values, the Company is required to make assumptions about a wide variety of internal and external factors. Significant assumptions used in the impairment analysis include financial projections of free cash flow (including significant assumptions about operations including the rate of future revenue growth, capital requirements, and income taxes), long-term growth rates for determining terminal value and discount rates. Comparative market multiples are used to corroborate the results of the discounted cash flow test. These assumptions require significant judgement. If the fair value is less than the carrying value of the reporting unit, then the implied value of goodwill would be calculated and compared to the carrying amount of goodwill to determine whether goodwill is impaired.
Our annual impairment test as of December 31, 2019 resulted in $8,100,000 of impairment charges related to our goodwill.
During the third quarter of 2020, the Company’s share price experienced a sustained reduction in trading values. This was also reflective of broader difficulties in the general economic conditions due to the COVID pandemic. Based on our examination of these and other qualitative factors at September 30, 2020, the Company concluded that that potential impairment indicators were present and that an impairment assessment was warranted for goodwill.
In testing goodwill for impairment as of September 30, 2020, the Company performed a quantitative impairment test, including computing the fair value of the Helomics reporting unit and comparing that value to its carrying value. Based upon the Company’s quantitative goodwill impairment test, the Company concluded that goodwill was impaired as of the testing date of September 30, 2020. Pursuant to ASU 2017-04 – Simplifying the Test for Goodwill Impairment, the single step is to determine the estimated fair value of the reporting unit and compare it to the carrying value of the reporting unit, including goodwill. To the extent the carrying amount of goodwill exceeds the implied goodwill, the difference is the amount of the goodwill impairment. The Company also completed a reconciliation between the implied equity valuation prepared and the Company’s market capitalization.
The quantitative review as of September 30, 2020 resulted in $2,997,000 of impairment expense related to goodwill. As of September 30, 2020, the cumulative impairment recorded was $11,097,000.
Goodwill balance at December 31, 2019 $ 15,690,290
Impairment (2,997,000 )
Goodwill balance at September 30, 2020 $ 12,693,290
When evaluating the fair value of Helomics reporting unit the Company used a discounted cash flow model and market comparisons. Key assumptions used to determine the estimated fair value included: (a) expected cash flow for the ~~three~~20-year period following the testing date (including net revenues, costs of revenues, and ~~nine months ended~~operating expenses as well as estimated working capital needs and capital expenditures); (b) an estimated terminal value using a terminal year growth rate of 3.0% determined based on the growth prospects of the reporting unit; and (c) a discount rate of 25% based on management’s best estimate of the after-tax weighted average cost of capital. The discount rate included a Company specific risk premium of 10% for risks related to the term of the forecasts.
The majority of the inputs used in the discounted cash flow model are unobservable and thus are considered to be Level 3 inputs. The inputs for the market capitalization calculation are considered Level 1 inputs.
The Company will continue to monitor its reporting units to determine whether events and circumstances warrant further interim impairment testing. Impairment of goodwill is not expected to be deductible for tax purposes. The Company can make no assurances that its goodwill will not be impaired in the future.
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Revenue Recognition
The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised goods or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales taxes are imposed on the Company’s sales to nonexempt customers. The Company collects the taxes from the customers and remits the entire amounts to the governmental authorities. The Company has elected an accounting policy to exclude sales taxes from revenue and expenses and to recognize shipping and handling costs at point of sale. The Company has elected a practical expedient and does not recognize financing components for contracts with customers containing customary terms for one year or less.
Revenue from Product Sales
The Company has medical device revenue consisting primarily of sales of the STREAMWAY System, as well as sales of the proprietary cleaning fluid and filters for use with the STREAMWAY System. This revenue stream is reported within both the domestic and international revenue segments. The Company sells its medical device products directly to hospitals and other medical facilities using employed sales representatives and independent contractors. Purchase orders, which are governed by sales agreements in all cases, state the final terms for unit price, quantity, shipping and payment terms. The unit price is considered the observable stand-alone selling price for the arrangements. The Company Sales Agreement, and Terms and Conditions, is a dually executed contract providing explicit criteria supporting the sale of the STREAMWAY System. The Company considers the combination of a purchase order and acceptance of its Terms and Conditions to be a customer’s contract in all cases.
Product sales for medical devices consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue when the following events have occurred: (1) the Company has transferred physical possession of the products, (2) the Company has a present right to payment, (3) the customer has legal title to the products, and (4) the customer bears significant risks and rewards of ownership of the products. Based on the shipping terms specified in the sales agreements and purchase orders, these criteria are generally met when the products are shipped from the Company’s facilities (“FOB origin,” which is the Company’s standard shipping terms). As a result, the Company determined that the customer is able to direct the use of, and obtain substantially all of the benefits from, the products at the time the products are shipped. The Company may, at its discretion, negotiate different shipping terms with customers which may affect the timing of revenue recognition. The Company’s standard payment terms for its customers are generally 30 to 60 days after the Company transfers control of the product to its customer. The Company allows returns of defective disposable merchandise if the customer requests a return merchandise authorization from the Company.
Customers may also purchase a maintenance plan for the medical devices from the Company, which requires the Company to service the STREAMWAY System for a period of one year subsequent to the one-year anniversary date of the original STREAMWAY System invoice. The maintenance plan is considered a separate performance obligation from the product sale, is charged separately from the product sale, and is recognized over time (ratably over the relevant one-year period) as maintenance services are available. A time-elapsed output method is used to measure progress because the Company transfers control evenly by providing a stand-ready service. The Company has determined that this method provides a faithful depiction of the transfer of services to its customers.
All amounts billed to a customer in a sales transaction for medical devices related to shipping and handling, if any, represent revenues earned for the goods provided, and these amounts have been included in revenue. Costs related to such shipping and handling billing are classified as cost of goods sold. This revenue stream is reported under the domestic and international sales segments.
Variable Consideration
The Company records revenue from distributors and direct end customers in an amount that reflects the transaction price it expects to be entitled to after transferring control of those goods or services. The Company’s current product sales contracts do not contain any features that create variability in the amount or timing of revenue to be earned.
Warranty
The Company generally provides one-year warranties against defects in materials and workmanship on product sales and will either repair the products or provide replacements at no charge to customers. As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations. Warranty reserve requirements are based on a specific assessment of the products sold with warranties where a customer asserts a claim for warranty or a product defect.
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Revenue from Clinical Testing
The Precision Oncology Insights are clinic diagnostic testing comprised of the Company’s ChemoFx and BioSpeciFx tests. The ChemoFx test determines how a patient’s tumor specimen reacts to a panel of various chemotherapy drugs, while the BioSpeciFx test evaluates the expression of a particular gene related to a patient’s tumor specimen. Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The estimated uncollectible amounts are generally considered implicit price concessions that are a reduction in revenue. The Company’s performance obligations are satisfied at a point in time when test reports are delivered.
For service revenues, the Company estimates the transaction price which is the amount of consideration it expects to be entitled to receive in exchange for providing services based on its historical collection experience using a portfolio approach as a practical expedient to account for patient contracts as collective groups rather than individually. The Company monitors its estimates of transaction price to depict conditions that exist at each reporting date. If the Company subsequently determines that it will collect more or less consideration than it originally estimated for a contract with a patient, it will account for the change as an increase or decrease to the estimate of the transaction price, provided that such adjustment does not result in a significant reversal of cumulative revenue recognized.
The Company recognizes revenue from these patients when contracts as defined in ASC 606, Revenue from Contracts with Customers are established at the amount of consideration to which it expects to be entitled or when the Company receives substantially all of the consideration subsequent to the performance obligations being satisfied. The Company’s standard payment terms for hospital and patient direct bill is 30 days after invoice date. This revenue stream is reported under the Helomics segment.
CRO Revenue
Contract revenues are generally derived from studies conducted with biopharmaceutical and pharmaceutical companies. The specific methodology for revenue recognition is determined on a case-by-case basis according to the facts and circumstances applicable to a given contract. The Company typically uses an input method that recognizes revenue based on the Company’s efforts to satisfy the performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation on the basis of the standalone selling price of each distinct good or service in the contract. Advance payments received in excess of revenues recognized are classified as deferred revenue until such time as the revenue recognition criteria have been met. Payment terms are net 30 from the invoice date, which is sent to the customer as the Company satisfies the performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. This revenue stream is reported under the Helomics and Soluble (as defined below) segments
Contract Balances
The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied. As of September 30, ~~2016,~~2020, and December 31, 2019, accounts receivable totaled $508,265 and $297,055, respectively.

~~Intangible Assets~~The Company’s deferred revenues related primarily to maintenance plans as of September 30, 2020 and December 31, 2019 were $66,123 and $40,384, respectively.

~~Intangible assets consist~~
14
Valuation and accounting for stock options and warrants
The Company determines the grant date fair value of ~~trademarks~~options and ~~patent costs. Amortization expense was $3,276~~warrants using a Black-Scholes option valuation model based upon assumptions regarding risk-free interest rate, expected dividend rate, volatility and ~~$9,067 in~~estimated term.
The fair value of each option and warrant grant is estimated on the ~~three and nine months ended September 30, 2017, and was $2,515 and $6,225 in~~grant date using the ~~three and nine months ended September 30, 2016, respectively. The assets are reviewed for impairment annually, and impairment losses, if any, are charged to operations when identified.~~Black-Scholes option valuation model with the following assumptions:
Nine Months Ended September 30,
2020 2019
Stock Options
Expected dividend yield 0.0% 0.0%
Expected stock price volatility 82.6% - 87% 78.6% - 82.4%
Risk-free interest rate 0.13% - 1.78% 1.5% - 2.76%
Expected life (years) 10 10
Warrants
Expected dividend yield 0.0% 0.0%
Expected stock price volatility 82.6% - 87% 78.6% - 82.4%
Risk-free interest rate 0.135% - 0.79% 1.39% - 2.58%
Expected life (years) 5 / 5.5 5

Income Taxes

The Company accounts for income taxes in accordance with ASC ~~740-~~ 740 - Income Taxes (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit ~~carryforwards~~carry forwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

There is no income tax provision in the accompanying condensed consolidated statements of ~~operations~~net loss due to the cumulative operating losses that indicate a 100% valuation allowance for the deferred tax assets and state income taxes is appropriate.
The Company reviews income tax positions expected to be taken in income tax returns to determine if there are any income tax uncertainties. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax positions will be sustained on examination by taxing authorities, based on technical merits of the positions. The Company would recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations, and any accrued interest and penalties would be included on the related tax liability line in the consolidated balance sheet. The Company has identified no income tax uncertainties.
During 2020 and 2019, the Company believes it experienced an ownership change as defined in Section 382 of the Internal Revenue Code which will limit the ability to utilize the Company’s net operating losses (NOLs). The Company may have experienced additional ownership changes in earlier years further limiting the NOL carry-forwards that may be utilized. The Company has not yet completed a formal Section 382 analysis. The general limitation rules allow the Company to utilize its NOLs subject to an annual limitation that is determined by multiplying the federal long-term tax-exempt rate by the Company’s value immediately before the ownership change

Tax years subsequent to ~~2013~~2017 remain open to examination by federal and state tax authorities.

~~Summary of Significant Accounting Policies~~Offering Costs

~~In March 2016,~~Costs incurred which are direct and incremental to an offering of the ~~FASB issued ASU 2016-09, “improvements~~Company’s securities are deferred and charged against the proceeds of the offering, unless such costs are deemed to Employee Share-Based Payment Accounting,” which requires companies to recognize additional tax benefits or expenses related to the vesting or settlement of employee share based awards as income tax provision or benefit in the income statement in the reporting periodbe insignificant in which case they occur. In addition, ASU 2016-09 requires that all tax related cash flows resulting from share-based payments, including the excess tax benefits related to settlement of stock-based awards, be classifiedare expensed as cash flows from operating activities in the statement of cash flows. The new standard is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company did not elect to early adopt ASU 2016-09, but rather adopted the guidance in the first quarter of 2017.incurred.

1315

The adoption of ASU 2016-09 required no retrospective adjustments to the financial statements. In addition, there was no material cumulative-effect adjustment to retained earnings, nor did the adoption impact the tax provision for the prior or current quarter.
~~Income Tax Balance Sheet Classification~~
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740)” providing guidance on the balance sheet classification of deferred taxes. The guidance requires that deferred tax assets and liabilities to be classified as noncurrent in the Balance Sheet. The guidance is effective for fiscal years beginning after December 15, 2016 with early adoption permitted. The Company adopted ASU 2015-17 in the first quarter of 2017 on a prospective basis and therefore prior periods were not retrospectively adjusted.
~~Patents and Intellectual Property~~
On January 25th, 2014, the Company filed a non-provisional PCT Application No. PCT/US2014/013081 claiming priority from the U.S. Provisional Patent Application, number 61756763 which was filed one year earlier on January 25th, 2013. The Patent Cooperation Treaty (“PCT”) allows an applicant to file a single patent application to seek patent protection for an invention simultaneously in each of the 148 countries of the PCT, including the United States. By filing this single “international” patent application through the PCT, it is easier and more cost effective than filing separate applications directly with each national or regional patent office in which patent protection is desired.
Our PCT patent application is for the enhanced model of the surgical fluid waste management system. We obtained a favorable International Search Report from the PCT searching authority indicating that the claims in our PCT application are patentable (i.e., novel and non-obvious) over the cited prior art. A feature claimed in the PCT application is the ability to maintain continuous suction to the surgical field while measuring, recording and evacuating fluid to the facilities sewer drainage system. This provides for continuous operation of the STREAMWAY System unit in suctioning waste fluids, which means that suction is not interrupted during a surgical operation, for example, to empty a fluid collection container or otherwise dispose of the collected fluid.
The Company holds the following granted patents in the United States and a pending application in the United States on its earlier models: US7469727, US8123731 and U.S. Publication No. US20090216205 (collectively, the “Patents”). These Patents will begin to expire on August 8, 2023.
In July 2015, Skyline Medical filed an international patent application for its fluid waste collection system and received a favorable determination by the International Searching Authority finding that all of the claims satisfy the requirements for novelty, inventive step and industrial applicability. Skyline anticipates that the favorable International Search Report will result in allowance of its other various national applications.
Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high credit quality financial institutions and, by policy, generally limits the amount of credit exposure to any one financial institution. The Company has a credit risk ~~concentration because~~ of ~~depositing $0.6 million of funds~~$1,781,714 for cash amounts held in a single institution that are in excess of ~~insurance limits in a single bank.~~
14
~~Product Warranty Costs~~
Inamounts issued by the three and nine months ending September 30, 2017, the Company incurred approximately $204 and $5,216 in current warranty costs and incurred $2,102 and $33,083 in warranty costs for the three and nine months ending September 30, 2016, respectively.
~~Segments~~
The Company operates in two segments for the sale of its medical device and consumable products. Predominantly most of the Company’s assets, revenues, and expenses for the three and nine months ending September 30, 2017 and for 2016 in entirety were located at or derived from operations in the United States. The Company completed its first sale outside of the United States, in Canada, in March 2017.Federal Deposit Insurance Corporation.

Risks and Uncertainties

The Company is subject to risks common to companies in the medical device ~~industry,~~and biopharmaceutical industries, including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with regulations of the ~~FDA~~Food and Drug Administration (“FDA”), Clinical Laboratory Improvement Amendments (“CLIA”), and other governmental agencies.

~~Interim Financial Statements~~Reclassifications
Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. The reclassifications had no effect on previously reported results of operations, cash flows or accumulated deficit.
Recent Accounting Pronouncements

The Company ~~has prepared~~considers the ~~unaudited interim~~applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (the “FASB”). Recently issued ASUs not listed below either were assessed and determined to be not applicable or are currently expected to have no impact on the consolidated financial statements ~~and related unaudited financial information in the footnotes in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations~~ of the Securities and Exchange Commission (“SEC”) for interim financial statements. These interim financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary to present fairly the Company’s financial position, the results of its operations and its cash flows for the interim periods. These interim financial statements should be read in conjunction with the annual financial statements and the notes thereto contained in the Form 10-K filed with the SEC on March 15, 2017. The nature of the Company’s business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.

NOTE 6 – NOTES PAYABLE

Since the Company's common stock has no significant public trading history, and the Company has experienced no significant option exercises in its history, the Company is required to take an alternative approach to estimating future volatility and estimated life and the future results could vary significantly from the Company's estimates. The ~~Company compiled historical volatilities over a period~~balances of 2 to 7 years of 15 small-cap medical companies traded on major exchanges and 10 mid-range medical companies on the OTC Bulletin Board and combined the results using a weighted average approach. In the case of ordinary options to employees the Company determined the expected life to be the midpoint between the vesting term and the legal term. In the case of options or warrants granted to non-employees, the Company estimated the life to be the legal term unless there was a compelling reason to make it shorter.notes payable were as follows:

When an option or warrant is granted in place of cash compensation for services, the Company deems the value of the service rendered to be the value of the option or warrant. In most cases, however, an option or warrant is granted in addition to other forms of compensation and its separate value is difficult to determine without utilizing an option pricing model. For that reason the Company also uses the Black-Scholes option-pricing model to value options and warrants granted to non-employees, which requires the input of significant assumptions including an estimate of the average period the investors or consultants will retain vested stock options and warrants before exercising them, the estimated volatility of the Company's common stock price over the expected term, the number of options and warrants that will ultimately be forfeited before completing vesting requirements, the expected dividend rate and the risk-free interest rate. Changes in the assumptions can materially affect the estimate of fair value of stock-based consulting and/or compensation and, consequently, the related expense recognized.

Since the Company has limited trading history in its stock and no first-hand experience with how its investors and consultants have acted in similar circumstances, the assumptions the Company uses in calculating the

Due Date As of
September 30, 2020 As of
December 31, 2019
Bridge loan March 31, 2021 $ 1,721,776 $ 1,989,104
Promissory note 2019 March 31, 2021 2,015,833 680,833
Promissory note 2020 March 31, 2021 1,967,500 -
Paycheck Protection Plan April 20, 2022 541,867
Short term borrowing May 26, 2020 - 18,563
Short term borrowing June 10, 2020 - 147,783
Short term borrowing June 20, 2020 - 194,943
Dr. Schwartz notes September 30, 2020 - 2,115,000
Total Notes Payable, gross 6,246,976 5,146,226
Less: Unamortized discount 495,100 350,426
Total Notes Payable, net $ 5,751,876 $ 4,795,800

The fair value of ~~stock-based payment awards represent its best estimates, which involve inherent uncertainties and~~ the ~~application~~Company’s notes payable was $4,476,245 as of management's judgment. As a result, if factors change and the Company uses different assumptions, the Company's equity-based consulting and interest expense could be materially different in the future.September 30, 2020 based on Level 2 inputs.

~~Valuation and accounting for options and warrants~~

The Company determines the grant date fair value of options and warrants using a Black-Scholes option valuation model based upon assumptions regarding risk-free interest rate, expected dividend rate, volatility and estimated term.Bridge Loan

In ~~January 2015,~~September 2018, the Company issued ~~a dividend adjustment~~convertible secured promissory notes to two private investors in the ~~Purchasers~~original principal amount of an aggregate $2,297,727 (the “bridge loan”) in exchange for cash proceeds of $2,000,000. As additional consideration for the ~~Preferred Shares~~loan, the Company issued an aggregate 65,000 shares of its common stock as ~~described above. Certain previous dividends paid were calculated with~~inducement shares plus warrants to acquire up to an aggregate 107,178 shares of common stock at an exercise price of ~~$487.50 per share, but should have been calculated at $243.75~~$11.55 per share. AsPursuant to a ~~result, 125~~security agreement between the Company and the investors, the Company granted to the investors a security interest in its assets to secure repayment of the note. The bridge loan accrues interest at a rate of 8% per annum. In February 2019, the Company entered into a forbearance agreement with the bridge loan investors pursuant to which, among other things, the investors agreed to forbear on their rights to accelerate the bridge loan based on an event of default and a claimed event of default. In connection with such forbearance, an additional $344,659 in principal and an additional 16,667 common shares ~~of common stock~~ were issued to ~~16 holders~~the investors. In September 2019, the bridge loan of ~~Preferred Shares.~~one investor was paid in full. On March 19, 2020, the Company and the remaining investor agreed to extend the note maturity to June 28, 2020. The Company and the remaining investor further agreed to extend the due date to July 15, 2020 and then in July 2020 agreed to extend to September 30, 2020. Effective September 30, 2020, the remaining investor and the Company agreed to extend to March 31, 2021.

~~On March 31, 2015,~~No payment penalties were paid in relation to payments on the ~~Company issued dividends to~~bridge loan during the ~~Purchasers~~three and nine months ended September 30, 2020 and $517,247 in payment penalties were accrued but not paid as of September 30, 2020. The outstanding principal balance of the ~~Preferred Shares~~bridge loan as ~~described above. The dividends are at~~of September 30, 2020 was $1,721,776, with an ~~annual rate~~unamortized discount of 6% of the stated value of the Preferred Shares paid on a quarterly basis in the form of common stock per a stipulated $243.75 per share. Thus, 125 shares of common stock were issued to 16 holders of Preferred Shares.$0.

~~On June 30, 2015,~~Each investor received the ~~Company issued dividends~~right to ~~Purchases~~convert all or any part of the Preferred Shares as described above. The dividends are at an annual rate of 6% of the stated value of the Preferred Shares paid on a quarterly basis in the form of common stock per a stipulated $243.75 per share. Thus, 125its bridge loan into shares ~~of common stock were issued to 16 holders of Preferred Shares.~~

For grants of stock options and warrants in 2015 the Company used a 1.63% to 2.35% risk-free interest rate, 0% dividend rate, 59% to 66% volatility and estimated terms of 5 to 10 years. Value computed using these assumptions ranged from $6.875 to $139.2375 per share.

~~On March 25, 2016, the Company commenced the Exchange Offer which was completed on April 20, 2016, as described above.~~

On July 1, 2016, the Company issued inducement stock options in accordance with NASDAQ listing rule for 40,000 shares of common stock, par value $0.01 at $3.75 per share to the Company’s newly hired Vice President of Sales. The options will vest in six equal increments: on the first, second, third, fourth, fifth and sixth quarters of the hiring date anniversary.

On October 4, 2016, the Company issued 400,000 shares of common stock, par value $0.01, to be held in escrow in connection with the Company’s Partnership and Exclusive Reseller Agreement with GLG Pharma, LLC.

For grants of stock options and warrants in 2016 the Company used a 1.46% to 2.45% risk free interest rate, 0% dividend rate, 59% to 66% volatility and estimated terms of 5 to 10 years. Value computed using these assumptions ranged from $1.6329 to $3.7195 per share.

~~On April 19,2017, the Company received 400,000 shares of common stock, par value $.01, that was held in escrow pursuant to the termination~~ of the Company’s ~~Partnership~~common stock at a conversion factor that is the lesser of a discounted 20-day average price or a set price floor. The number of conversion shares that may be issued is subject to an exchange cap such that the sum of (1) the total number of conversion shares plus (2) the number of inducement shares is limited to an aggregate 267,833 shares. As of September 30, 2020, the maximum number of conversion shares have been issued, no additional shares are available to be issued related to this conversion option. During the nine months ended September 30, 2020 and ~~Exclusive Reseller Agreement with GLG Pharma, LLC.~~2019, the remaining investor converted $267,328 and $100,000 of the principal balance, respectively and received 170,000 and 26,573 shares of the Company’s common stock, respectively.

~~For grants~~Dr. Schwartz Notes

In November 2018, Dr. Schwartz made a loan to the Company with a principal balance of ~~stock option~~$370,000. As of December 31, 2018, one promissory note was held with a principal balance of $370,000 and an unamortized discount of $63,028. From November 30, 2018 through July 15, 2019, Dr. Schwartz made numerous loans to the Company in the total amount of $1,920,000 under two promissory notes. As consideration for these amounts, Dr. Schwartz received promissory notes and warrants to purchase 22,129 shares of the Company’s common stock at $8.36 per share. Further, beginning on February 1, 2019 and the first day of each calendar month thereafter while the note remained outstanding, a number of additional warrants were issued. Beginning in ~~2017~~October 2019, the Company ~~used a 1.92%~~and Dr Schwartz began to ~~2.40% risk free interest rate, 0% dividend rate, 59%~~renegotiate the note. Due to ~~66% volatility and estimated terms of 5 to 10 years. Value computed using these assumptions ranged from $1.0293 to $1.5489 per share.~~the negotiations, the Company did not issue any additional warrants because they would be cancelled under the new deal.

During January 2020, the Company entered into an exchange agreement with Dr. Schwartz. Under the exchange agreement, the two outstanding notes were cancelled and in exchange a new promissory note in the amount of $2,115,000 bearing 12% interest per annum and maturing on September 30, 2020 was issued. In addition to the promissory note, Dr. Schwartz received 50,000 shares of the Company’s common stock. All warrants issued under the prior promissory notes were cancelled under the exchange agreement; no rights and obligations remain under the cancelled notes. The ~~following summarizes transactions~~Company determined that the exchange agreement had, in substance, occurred at December 31, 2019.

Effective as of April 21, 2020, the Company and Carl Schwartz, entered into an exchange agreement relating to a promissory note of the Company dated January 31, 2020 issued by the Company in the principal amount of $2,115,000. The note bore twelve percent (12%) interest per annum and had a maturity date of September 30, 2020. The accrued interest on the note through April 21, 2020 was $77,878, resulting in a total balance of $2,192,878 in principal and accrued interest on the Note as of such date. Dr. Schwartz and the Company agreed to exchange the note for newly issued shares of common stock ~~options~~of the Company at market value. Pursuant to the exchange agreement, Dr. Schwartz was issued 1,533,481 shares of newly issued common stock at an exchange rate of $1.43 per share, equal to the closing price of the common stock on April 21, 2020. Dr. Schwartz agreed (1) not to sell or otherwise transfer 766,740 shares for three months after the date of the exchange agreement, and ~~warrants~~(2) not to sell or otherwise transfer the remaining 766,741 shares for six months after the date of the exchange agreement.

Promissory Note 2019

During September 2019, the Company issued a promissory note with a principal amount of $847,500 in exchange for cash proceeds of $700,000. Pursuant to a security agreement between the Company and the investor, the Company has granted to the investor a security interest in its assets to secure repayment of the note. As additional consideration for the ~~periods indicated:~~

Stock Options Warrants
Number of
Shares Average
Exercise
Price Number of
Shares Average
Exercise
Price
Outstanding at December 31, 2015 31,350 $ 133.23 323,099 $ 128.40

Issued 157,982 3.14 1,487,881 0.71
Expired (22,377 ) 122.13 - -
Exercised (1,312 ) 65.75 (939,879 ) -

Outstanding at December 31, 2016 165,643 $ 11.22 871,101 $ 52.22

Issued 2,459,368 1.47 385,000 2.25
Expired (12,730 ) 10.39 (1,533 ) 281.60
Exercised - - - -

Outstanding at September 30, 2017 2,612,281 $ 2.05 1,254,568 $ 36.60

~~At September 30, 2017, 46,537~~loan, the Company issued an aggregate 8,857 shares of its common stock ~~options are fully vested and currently exercisable with a weighted average~~to the investor plus warrants to acquire up to 68,237 shares of the Company’s common stock at an exercise price of ~~$30.00~~$6.21 per share. The warrants are exercisable beginning on the sixth month anniversary of the effective date through the fifth-year anniversary thereof. The note accrues interest at a rate of 8% per annum.

On March 19, 2020, the Company entered into an agreement to extend the due date of its Promissory Note 2019 from March 27, 2020 and March 31, 2020 to June 27, 2020. The Company increased the principal amount due on the note by $300,000 and issued 30,000 shares of its common stock as consideration for the extension. The change in value resulting from the extension exceeded 10% and as a result the extension was accounted for as an extinguishment under ASC 470, Debt. During the first quarter of 2020, the Company incurred a $300,000 loss on debt extinguishment related to the extension of the note.

The Company and the investor further agreed to extend the due date of the note to July 15, 2020 and then agreed to extend to September 30, 2020. The change in value resulting from the extension to September 30, 2020 exceeded 10% and as a result the extension was accounted for as an extinguishment under ASC 470, Debt. During the third quarter of 2020, the Company incurred a $345,000 loss on debt extinguishment related to the extension of the note to September 30, 2020.

Effective September 30, 2020, the investor and the Company agreed to further extend the maturity date of the note to March 31,2021. The change in value resulting from the extension to March 31, 2021 exceeded 10% and as a result the extension was accounted for as an extinguishment under ASC 470, Debt. During the third quarter of 2020, the Company incurred a $690,000 loss on debt extinguishment related to the extension of the note to March 31, 2021. Further, the parties agreed that the note shall be convertible into shares of the Company’s common stock, par at a price equal to the lesser of (i) $1.00 and (ii) 70% of the lowest VWAP (as defined in the note) of the Company’s common stock during the twenty (20) Trading Day (as defined) period ending on either (i) the last complete Trading Day prior to the conversion date or (ii) the conversion date, as determined by the holder in its sole discretion upon such conversion (subject to adjustment).

No payment penalties were paid in relation to payments on this promissory note during the three and nine months ended September 30, 2020 and $279,903 in payment penalties were accrued but not paid as of September 30, 2020. As of September 30, 2020, the remaining balance on the promissory note was $2,015,833 with $495,100 unamortized discount.

Promissory Note 2020

On February 5, 2020, the Company issued a promissory note with a principal amount of $1,450,000 in exchange for cash proceeds of $1,200,000. Distributions of proceeds under the note were to be made in three tranches. Net proceeds of $400,000 were received for the first, second, and third tranches on February 5, 2020, March 5, 2020, and April 5, 2020, respectively. Pursuant to a security agreement between the Company and the investor, the Company has granted to the investor a security interest in its assets to secure repayment of the note. The note accrues interest at a rate of 8% per annum. Subject to certain limitations, the outstanding principal amount of the note and interest thereon were convertible at the election of the investor into shares of the Company’s common stock at a conversion price equal to $2.589. The conversion price was amended effective September 30, 2020 to a variable price equal to 70% of the lowest VWAP (as defined in the note) of Company’s common stock during the twenty (20) Trading Day (as defined in the note) period ending on either (i) the last complete Trading Day prior to the conversion date or (ii) the conversion date, as determined by the holder in its sole discretion upon such conversion (subject to adjustment). No payment penalties were paid in relation to payments on this promissory note during the three and nine months ended September 30, 2020 and $338,337 in payment penalties were accrued but not paid as of September 30, 2020. As of September 30, 2020, the outstanding balance on the promissory note was $1,967,500 with no remaining unamortized discount. The note contains a conversion feature and a ~~weighted average remaining term~~put which were determined to be derivatives and are discussed further below.

Effective July 15, 2020, the Company and the investor agreed to amend the maturity date of ~~6.59 years. There are 1,254,568 warrants that are fully vested~~the note to September 30, 2020. The change in value resulting from the amendment to maturity to September 30, 2020 exceeded 10% and ~~exercisable. Stock-based compensation recognized~~as a result the amendment was accounted for as an extinguishment under ASC 470, Debt. During the ~~nine months ending September 2017 and September 2016 was $(7,908) and $147,158, respectively. The~~third quarter of 2020, the Company ~~has $2,901,348 of unrecognized compensation expense~~incurred a $172,500 loss on debt extinguishment related to ~~non-vested stock options that are expected~~the amendment of the note to ~~be recognized over the next 24 months.~~September 30, 2020.

~~The following summarizes~~As additional consideration, the ~~status~~Company issued to the investor warrants to purchase 94,631, 92,700 and 92,700 shares of ~~options and warrants outstanding at September 30, 2017:~~

Range of Prices Shares Weighted Remaining Life
Options
$ 1.454 17,200 10.00
$ 1.47 2,427,882 9.73
$ 2.10 14,286 9.50
$ 2.25 293 8.90
$ 2.42 24,768 8.76
$ 2.80 57,145 9.26
$ 3.75 44,000 8.76
$ 4.125 3,636 9.01
$ 4.1975 7,147 8.97
$ 4.25 3,529 8.50
$ 5.125 3,902 8.94
$ 65.75 190 7.86
$ 73.50 1,157 8.26
$ 77.50 2,323 7.75
$ 80.25 187 8.01
$ 86.25 232 7.50
$ 131.25 81 4.94
$ 148.125 928 5.47
$ 150.00 1,760 4.88
$ 162.50 123 7.26
$ 206.25 121 7.01
$ 248.4375 121 5.79
$ 262.50 130 5.79
$ 281.25 529 5.30
$ 318.75 3 5.60
$ 346.875 72 6.50
$ 431.25 306 6.44
$ 506.25 188 6.25
$ 596.25 42 6.00

2,612,281

Warrants
$ 2.25 385,000 4.32
$ 4.46 756,999 4.17
$ 93.75 2,255 0.45
$ 123.75 94,084 2.92
$ 150.00 4,114 0.45
$ 225.00 107 0.32
$ 243.75 2,529 1.84
$ 281.25 4,364 0.32
$ 309.375 2,850 1.86
$ 309.50 222 2.10
$ 337.50 178 0.72
$ 371.25 944 0.66
$ 506.25 59 1.38
$ 609.375 862 1.34
1,254,568

~~Stock options and warrants expire on various dates from November 2017 to September 2027.~~

~~At a special meeting of stockholders held on September 15, 2016,~~ the Company’s ~~stockholders (i) approved an amendment to the Company’s certificate of incorporation to increase the number of authorized shares of~~ common stock ~~from 100,000,000 to 200,000,000 and (ii) approved an amendment to~~at the ~~Company’s certificate of incorporation to affect a reverse stock split~~closing of the ~~outstanding~~first, second and third tranches, respectively. The warrants are exercisable beginning on the sixth month anniversary of the issuance date at an exercise price equal $2.992 per share. The Company also issued 46,875 shares of its common stock ~~within certain limits. On September 16, 2016,~~to the ~~Company filed a Certificate of Amendment to its Certificate of Incorporation to affect~~investor at the ~~increase in the authorized capital stock. On October 26, 2016, the Company filed a Certificate of Amendment to its Certificate of Incorporation to affect a reverse stock split~~closing of the outstanding shares of its common stock at a ratio of one-for-twenty-five (1:25), and a proportionate decrease of the authorized common stock from 200,000,000 shares to 8,000,000 shares. The reverse stock split took effect at 5:00 p.m. New York time on October 27, 2016, and the Company’s common stock commenced trading on a post-split basis on October 28, 2016.first tranche.

Short Term Borrowings

The ~~Company’s board~~Company entered into short-term borrowings with an investor. The maturity date of ~~directors had determined~~the notes is six months after the dates of issuance with interest rates of 8% payable at maturity. Repayment of such notes is subject to a premium. During the three and nine months ended September 30, 2020, the Company ~~may require additional shares~~issued short term notes for ~~anticipated~~a total of $1,098,684 for cash proceeds of $1,020,000 and repaid $1,459,973 of principal using a portion of proceeds from the equity ~~financings, future equity offerings, strategic acquisition opportunities, and~~financing facility. Payment penalties of $247,327 were paid in relation to payments on these short-term borrowings during the continued issuance of equity awards under our stock incentive plan to recruit and retain key employees, and for other proper corporate purposes. As a result, the board of directors called another special meeting of the stockholders that took place on January 29, 2017. The vote, a proposal to increase the number of authorized shares of common stock from 8,000,000 shares to 24,000,000 shares of common stocknine months ended September 30, 2020. There were no amounts outstanding under the ~~Company’s certificate of incorporation passed.~~

~~Stock Options and Warrants Granted by the Company~~

~~The following table is the listing of stock options and warrants~~short-term borrowings as of September 30, ~~2017, by year of grant:~~2020.

Stock Options:
Year Shares Price
2011 173 $281.25
2012 1,841 131.25 – 150.00
2013 1,553 148.13 – 596.25
2014 835 162.50 – 431.25
2015 4,088 65.75 – 86.25
2016 144,423 2.25 – 5.13
2017 2,459,368 1.45 – 2.10
Total 2,612,281 $1.45 – 596.25

April 2020 Paycheck Protection Program

On April 20, 2020, the Company entered into a promissory note with Park State Bank, which provides for an unsecured loan of $541,867 pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (the “CARES Act”). The promissory note has a term of 2 years with a 1% per annum interest rate. Payments are deferred for 6 months from the date of the promissory note and the Company can apply for forgiveness of all or a portion of the promissory note after 60 days for covered use of funds.

Pursuant to the terms of the PPP, the promissory note, or a portion thereof, may be forgiven if proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, costs used to continue group health care benefits, mortgage interest payments, rent and utilities. The Company has used all proceeds for qualifying expenses. The Company has requested forgiveness; however, there is no assurance that we will be able to obtain forgiveness of this loan. The terms of the promissory note, including eligibility and forgiveness, may be subject to further requirements in regulations and guidance adopted by the Small Business Administration.

Warrants:
Year Shares Price
2012 1,259 $281.25
2013 10,703 93.75 - 371.25
2014 6,455 243.75 – 609.38
2015 94,152 0.00 – 243.75
2016 756,999 4.46
2017 385,000 2.25
Total 1,254,568 $0.00 – 609.38

~~NOTE 4 – SHORT-TERM NOTES PAYABLE~~

~~From July through September 2014, we entered into a series~~In addition, and in lieu of ~~securities~~common shares, the investors also purchased prefunded warrants to purchase agreements pursuant to which we issued approximately $1.8 million original principal amount (subsequently reduced to approximately $1.6 million aggregate principal amount in accordance with their terms) of convertible promissory notes (the “2014 Convertible Notes”) and warrants exercisable for1,390,166 shares of ~~our~~ common stock ~~for an aggregate~~at a purchase price of ~~$1,475,000. Of~~$2.12 per prefunded warrant, which represents the per share offering price, minus the $0.0001 per share exercise price of each such prefunded warrant. As a result of the prefunded warrants exercise price being of a nominal amount, these warrants were included as outstanding shares within our earnings per share calculation during the period from purchase through to exercise during the second quarter 2020.

The sale of the offering shares, prefunded warrants and A and B warrants resulted in gross proceeds of $3,498,612 and net proceeds of $3,127,818 after deducting the placement agent fees and estimated offering expenses payable by the Company. The Company agreed to use the net proceeds from the offering for general corporate purposes. The offering closed on March 18, 2020, subject to the satisfaction of customary closing conditions. See Note 8 –– Derivatives for discussion of A, B and agent warrants accounted for as derivative liabilities.

Effective September 23, 2020, the Company amended the terms of A and B warrants. Earlier in September, the Company notified the holders of the warrants that the Company would accept an exercise price therefor of $0.8457, amended from the original exercise price of $1.88 per share. The amendment also modified the settlement provisions of the warrants under certain circumstances; this ~~amount, we issued~~change resulted in a classification change from derivative liability to ~~SOK Partners, LLC,~~equity classification. See Note 8 –– Derivatives for discussion of A, B and agent warrants accounted for as derivative liabilities prior to September 23, 2020.

Equity Incentive Plan

The Company has an ~~affiliate~~equity incentive plan, which allows issuance of incentive and non-qualified stock options to employees, directors and consultants of the Company, ~~$122,196 original principal amount~~where permitted under the plan. The exercise price for each stock option is determined by the Board of Directors. Vesting requirements are determined by the Board of Directors when granted and currently range from immediate to three years. Options under this plan have terms ranging from three to ten years.

Schwartz Note Exchange

Effective as of April 21, 2020, the Company and Carl Schwartz, entered into an exchange agreement relating to a promissory note of the ~~2014 Convertible Notes and warrants exercisable for 5,431 shares of our common stock for an aggregate purchase price of $100,000. In April and May 2015, we~~Company dated January 31, 2020 issued ~~and sold to a private investor additional Convertible Notes~~by the Company in an aggregate original principal amount of $275,000 for an aggregate purchase price of $250,000, containing terms substantially similar to the 2014 Convertible Notes (the “2015 Convertible Notes” and, together with the 2014 Convertible Notes, the “Convertible Notes”). No warrants were issued with the 2015 Convertible Notes.

~~Under a provision in the existing agreements, upon effectiveness of a resale registration statement covering certain shares, on September 9, 2014,~~ the principal amount of $2,115,000. Pursuant to the ~~notes~~exchange agreement, Dr. Schwartz was ~~reduced~~issued 1,533,481 shares of newly issued common stock at an exchange rate of $1.43 per share. See Note 6 – Notes Payable.

May 2020 Registered Direct Offering and Concurrent Private Placement of Warrants

During May 2020, the Company entered into a securities purchase agreement with certain accredited investors for a registered direct offering of 1,396,826 shares of common stock, par value $0.01 per share. In a concurrent private placement, the Company also issued such investors warrants to purchase up to an aggregate of 1,396,826 shares of common stock. The shares and the warrants were sold at a combined offering price of $1.575 per share and associated warrant. Each warrant is exercisable immediately upon issuance at an exercise price of $1.45 per share and will expire five and one-half years from the issue date. The sale of the offering shares and associated warrants resulted in gross proceeds of $2,200,001 and net proceeds of $1,930,101 after deducting the placement agent fees and offering expenses payable by ~~11%~~the Company. The Company used the net proceeds from the offering to repay certain indebtedness and agreed to use the remaining net proceeds from the offering for general corporate purposes. The offering closed on May 8, 2020.

Acquisition from Soluble Therapeutics and BioDtech

On May 27, 2020, the Company entered into an Asset Purchase Agreement with InventaBioTech, Inc. (“InventaBioTech”) and two of its subsidiaries, Soluble Therapeutics, Inc. (“Soluble”), and BioDtech, Inc. (“BioDtech”), and simultaneously completed the acquisition of substantially all of Soluble’s and BioDtech’s assets. In exchange, the Company issued 125,000 shares of common stock and waived all existing claims that the Company has or may have against InventaBioTech (f/k/a CytoBioscience, Inc.). All of the shares issued in the acquisition were deposited into escrow, with 25,000 to ~~$1,603,260~~be released upon the six month anniversary of the closing, 25,000 to be released upon the nine month anniversary of the closing, and the remaining shares to be released on the one year anniversary of the closing. Notwithstanding the foregoing, all or some of the escrow shares may be released and returned to the Company for reimbursement in the event that the Company suffers a loss against which InventaBioTech, Soluble, and BioDtech have indemnified the Company pursuant to the Agreement. The Company is also entitled to reclaim 10,000 of the shares if, within six months of the closing, the Company is unable to successfully obtain ownership of all of Soluble’s interest under its license agreement with the UAB Research Foundation. As a result of the acquisition, which was treated as an asset acquisition, the Company recognized fixed assets of $1,492,500.

June 2020 Warrant exercise and issuance

During June 2020, the Company entered into an agreement with certain accredited institutional investors to immediately exercise for cash an aggregate of 1,396,826 of the warrants issued in connection with the May 2020 Registered Direct Offering, exercisable immediately at the exercise price of $1.45 per share of common stock plus an additional $0.125 for each new warrant to purchase up to a number of shares of common stock equal to 100% of the number of ~~Warrants was reduced~~shares issued pursuant to the exercise of the existing warrants. The new warrants are exercisable immediately and have a term of five and one-half years and an exercise price per share equal to $1.80. The Company received $2,130,701 in gross proceeds and net proceeds of $1,865,800 after deducting the placement agent fees and offering expenses payable by ~~11%, to 2,851 shares.~~the Company.

~~In connection with~~Effective on September 23, 2020, the ~~Offering,~~Company amended the ~~holders~~terms of ~~the Convertible Notes agreed~~warrants to ~~not exercise their right~~purchase up to ~~convert the Convertible Notes into~~1,396,826 shares of the Company’s common stock, par value $0.01 per share. The amendment modified the settlement provisions of the warrants under certain circumstances; this change resulted in a classification change from derivative liability to equity classification.

Acquisition of Quantitative Medicine

On July 1, 2020, the Company entered into an Asset Purchase Agreement with Quantitative Medicine LLC (“QM”), a Delaware limited liability company and its owners and simultaneously completed the acquisition of substantially all of QM’s assets owned by Seller. QM is a biomedical analytics and computational biology company that developed a novel, computational drug discovery platform called CoRE. CoRE is designed to dramatically reduce the time, cost, and financial risk of discovering new therapeutic drugs by predicting the main effects of drugs on target molecules that mediate disease. In exchange for QM’s assets, including CoRE, the ~~Company’s agreement to redeem all~~Company provided consideration in the form of 954,719 shares of common stock, which, when issued, had a fair value of $1,470,267. One half of the ~~outstanding Convertible Notes promptly following the consummation~~shares issued or 477,359 shares were deposited and held in escrow upon issuance, while 207,144 of the ~~Offering at~~remaining shares were issued to Carnegie Mellon University (“CMU”) in satisfaction of all pre-closing amounts owed to CMU under a ~~redemption price equal to 140%~~technology licensing agreement that was assumed by the Company on the closing date. Half of the ~~principal amount, plus accrued and unpaid interest to~~shares held in escrow will be released on the ~~redemption date. On August 31, 2015,~~six month anniversary of the closing date, and the other half will be released on the one year anniversary of the ~~offering,~~closing date; provided, however, that all or some of the escrow shares may be released and returned to the Company ~~redeemed~~for reimbursement in the ~~remaining $933,074 aggregate principal amount~~event that the Company suffers a loss against which the Selling Parties have indemnified the Company pursuant to the Agreement.

Warrants Issued in Connection with Helomics’ Acquisition

Effective on September 14, 2020 , the Company amended the terms of ~~Convertible Notes plus interest and a 40% redeemable premium,~~warrants to purchase up to 1,424,506 shares of the Company’s common stock, par value $0.01 per share, which were issued to certain holders in connection with the Company’s merger transaction with Helomics on April 4, 2019. In September 2020, the Company notified the holders of the warrants that the Company will accept an exercise price of $0.845, equal to the last reported per share price of Common Stock on the Nasdaq Capital Market on September 11, 2020, amended from the original exercise price of $10.00 per share (as adjusted for a ~~total payment of $1,548,792. Of this amount, approximately $167,031~~one-for-ten (1:10) reverse stock split that was ~~paid to its affiliates in redemption of their Convertible Notes. Each holder~~effective on October 29, 2019). The value of the ~~Convertible Notes agreed~~amendment was determined based on the increase in the fair value on the date of modification using the Black Scholes method and equaled $554,287. The amendment was accounted for as a deemed dividend and increased the loss attributable to the ~~foregoing terms~~common shareholders when calculating earnings per share. The Warrants were issued on April 4, 2019 to holders of warrants in Helomics; the Warrants expire on April 4, 2024. See Note 9 – Loss per Share.

The following summarizes transactions for stock options and ~~entered into an Amendment to Senior Convertible Notes and Agreement with~~warrants for the ~~Company. As of~~periods indicated:

Stock Options Warrants
Number of
Shares Average
Exercise
Price Number of
Shares Average
Exercise
Price
Outstanding at December 31, 2018 366,928 $ 17.03 362,664 $ 41.67

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

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

Issued 121,689 1.42 7,992,706 1.14
Forfeited (51,637 ) 10.03 (119,441 ) 6.47
Exercised - - (2,786,992 ) 0.79

Outstanding at September 30, 2020 836,655 $ 9.96 7,257,883 $ 5.36

Stock-based compensation expense recognized for nine months ended September 30, ~~2017, none~~2020 and September 30, 2019 was $557,452 and $2,004,366, respectively. Stock-based compensation expense recognized for three months ended September 30, 2020 and September 30, 2019 was $134,675 and $360,146, respectively. The Company has $20,196 of unrecognized compensation expense related to non-vested stock options that are expected to be recognized over the ~~Convertible Notes were outstanding.~~next 18 months.

Richard L. Gabriel is also contracted as the Chief Operating Officer for TumorGenesis. Through April 1, 2019, Mr. Gabriel received $12,000 per month pursuant to a renewable six-month contract. On May 1, 2019, Mr. Gabriel executed a one-year contract with renewable three-month periods to continue as the Chief Operating Officer for TumorGenesis, receiving $13,500 in monthly cash payments.

Dr. Carl Schwartz, the Company’s CEO, made loans to the Company in exchange for promissory notes and common stock. See Note 6 – ~~RETIREMENT SAVINGS PLAN~~Notes Payable for detailed description of these arrangements.

We have a pre-tax salary reduction/profit-sharing plan under the provisions of Section 401(k) of the Internal Revenue Code, which covers employees meeting certain eligibility requirements. In fiscal 2017 and 2016, we matched 100%, of the employee’s contribution up to 4% of their earnings. The employer contribution was $7,724 and $25,100 for the three and nine months ending September 30, 2017 and was $7,401 and $28,196 for the three and nine months ending September 30, 2016, respectively.

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

We were incorporated in Minnesota in April 2002 under the name BioDrain Medical, Inc. Effective August 6, 2013, the Company changed its name to Skyline Medical Inc. Pursuant to an Agreement and Plan of Merger dated effective December 16, 2013, the Company merged with and into a Delaware corporation with the same name that was its wholly-owned subsidiary, with such Delaware Corporation as the surviving corporation of the merger. We manufacture an environmentally conscientious system for the collection and disposal of infectious fluids that result from surgical procedures and post-operative care. Since our inception in 2002, we have invested significant resources into product development. We believe that our success depends upon converting the traditional process of collecting and disposing of infectious fluids from the operating rooms of medical facilities to our wall-mounted Fluid Management System (“SYSTEM”) and use of our proprietary cleaning fluid and bifurcated filter.

We currently have a Vice President of Sales, one in house sales person and five regional sales managers to sell the STREAMWAY SYSTEM. We have signed two independent contractors, and will continue to sign more, to further represent the Company across the country and in Canada in the fourth quarter and fiscal 2018. We have been issued our Medical Device Establishment License permitting the Company to sell the STREAMWAY SYSTEM and disposables across the 13 provinces of Canada. In March 2017, the Company completed its first sale of a STREAMWAY SYSTEM to a customer in Ontario. In June 2017, we received notice that our STREAMWAY SYSTEM has met all requirements and can now be affixed with the CE mark and marketed in 32 European countries. We have signed a contract with a special consultant to hire distributors throughout Europe and Canada to sell the STREAMWAY SYSTEM. During the fourth quarter, we have executed contracts with three international distributors. Quadromed, is a Canadian distributor who will represent us throughout the entire Canadian country over the next two years, with annual automatic renewals. MediBridge Sarl, is a Swiss distributor representing us in Switzerland entirely over the next two years, with annual automatic renewals. Device Technologies Australia PTY LTD, is an Australian distributor representing us throughout Australia, New Zealand, Fiji and the Pacific Islands over the next five years with annual automatic renewals.

We have also reached a short-term exclusive agreement with Alliant Healthcare, a major provider of medical device products to the federal government. Alliant Healthcare is a CVE verified SDVOSB (Service-Disabled Veteran-Owned Small Business). The agreement is for ninety days (July 1 – September 30, 2017), with an optional ninety-day renewal term (October 1 – December 31, 2017, the government’s first fiscal quarter) upon agreement of both parties. We have signed a three-year contract with Alliant effective November 1, 2017 ending October 31, 2020, with annual automatic renewals thereafter.

Since inception, we have been unprofitable. We incurred net losses of approximately $1.0 million and $4.9 million for the three and nine months ended September 30, 2017, and $1.1 million and $5.8 million for the three and nine months ended September 30, 2016, respectively. As of September 30, 2017, and September 30, 2016, we had an accumulated deficit of approximately $51.9 million and $47.0 million, respectively. We received approval from the FDA in April 2009 to commence sales and marketing activities of the STREAMWAY SYSTEM and shipped the first system in 2009. However, there was no significant revenue prior to 2011, primarily due to lack of funds to build and ship the product.

In the first quarter of 2014, the Company commenced sales of an updated version of the STREAMWAY SYSTEM, which provides several enhancements to the existing product line including a more intuitive and easier to navigate control screen, data storage capabilities, and additional inlet ports on the filters, among other improvements. This updated version utilizes improved technology, including the capability for continuous flow and continuous suctioning, as covered by our provisional patent application filed in 2013 and our non-provisional patent application filed in January 2014. We have sold one hundred three STREAMWAY units to date.

We expect the revenue for STREAMWAY SYSTEM units to increase significantly at such time as significantly more hospitals approve the use of the units for their applications and place orders for billable units. We also expect an increase in trial-based units. Trial basis units are either installed in or hung on the hospital room wall. The unit is connected to the hospital plumbing and sewer systems, as well as, the hospital vacuum system. The unit remains on the customer site for 2 – 4 weeks, as contracted, at no cost to the customer. However, the customer does purchase the disposable products (cleaning fluid and filters) necessary to effectively operate the units. Once the trial period has expired, the unit is either returned to the Company or purchased by the customer. If purchased, at that time, the Company invoices the customer based upon a contracted price negotiated prior to the trial.

We have never generated sufficient revenues to fund our capital requirements. We have funded our operations through a variety of debt and equity instruments. See “Liquidity and Capital Resources – Financing Transaction” below. In 2014, we completed private placements of Series A Preferred Stock and convertible notes raising aggregate gross proceeds of $3,530,000. In September 2014, we commenced a public offering that was delayed, and we did not complete our public offering until August 2015. During that period of time, due to limited funding and continued operating losses, we curtailed our operations and delayed our expenditures to stay in operation. These factors negatively affected our sales in late 2014 and the full year 2015. On August 31, 2015, the Company completed a public offering of units consisting of common stock, preferred stock and warrants, as well as concurrent uplisting to the NASDAQ Capital Market, resulting in net proceeds of approximately $13.5 million. On November 30, 2016, the Company completed a registered direct offering of units consisting of common stock and warrants, with net proceeds of approximately $1.7 million. On January 19, 2017, the Company received net proceeds of $3.5 million because of a public offering of units consisting of common stock and warrants. Subsequently, in connection with the offering the underwriter exercised their over-allotment option in full; the Company received additional proceeds of $350,000 on February 22, 2017.

Our future cash requirements and the adequacy of available funds depend on our ability to sell our products, the cash needs relating to our operations, prospective acquisitions and strategic relationships, and the availability of future financing to fulfill our business plans. See “Plan of Financing; Going Concern Qualification” below.

As a company, our limited history of operations makes prediction of future operating results difficult. We believe that period to period comparisons of our operating results should not be relied on as predictive of our future results.

~~The Company is seeking to broaden its business and from time to time considers acquisitions of companies and strategic partnerships and investments.~~

On August 9, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Skyline Cyto Acquisition, Inc. and CytoBioscience, Inc. (“CytoBioscience”). CytoBioscience creates and manufactures devices used in human cell research focused on new therapeutic drug development and has a well-known scientific and technical staff, collaborative partnerships with leading pharmaceutical companies and strategic alliances with key groups and academic institutions. The Merger Agreement contemplated a reverse triangular merger with CytoBioscience becoming a wholly owned operating subsidiary of the Company (the “Merger”). In November 2017, the Company and CytoBioscience announced that they terminated the Merger Agreement to focus on structuring a proposed joint venture to market CytoBioscience’s personalized research services

In July 2017, the Company began to advance funds to CytoBioscience for working capital for CytoBioscience’s business in contemplation of signing the Merger Agreement and completing the Merger. All of the notes receivable bear simple interest at 8% and are due in full on December 31, 2017. All of the notes are covered by a security interest in all of CytoBioscience’s accounts receivable and related rights in connection with all of the advances. The principal amount of the secured promissory notes receivable from CytoBioscience totaled $785,000 as of September 30, 2017. Advances since the end of the quarter total $285,000, for total principal amount of the secured notes of $1,070,000.

In November 2017, the Company announced proposed joint venture with Helomics Corporation, a precision diagnostic company and integrated clinical contract research organization, to use the Helomics D-CHIP™ platform to develop new approaches for personalized cancer diagnosis and care. This partnership between the two companies is expected to provide Skyline with opportunities to generate revenues from additional markets. Skyline Medical will own 51% of the joint venture, with Helomics owning the remaining 49%. In November 2017, the Company advanced $175,000 for working capital for Helomics’ business in contemplation of the joint venture. The notes receivable bear simple interest at 8% and is due in full on April 30, 2018. The note is covered by a security interest in certain equipment of Helomics.

~~Revenue.~~ The Company recognized $153,000 of revenue in the three months ended September 30, 2017 compared to $135,000 in revenue in the three months ended September 30, 2016, an increase of 13%. The Company recognized $435,000 of revenue in the nine months ended September 30, 2017, compared to $317,000 in revenue in the nine months ended September 30, 2016, an increase of 37%. There were 5 sales of STREAMWAY units year to date through September 30, 2017, including our first sale of a STREAMWAY System in Canada. Our goal in ramping up our sales efforts following ~~our hiring five regional sales managers is to have a greater revenue effect in the upcoming quarters.~~

~~Cost of sales.~~ Cost of sales in the three months ended September 30, 2017 was $29,000 and $26,000 in the three months ended September 30, 2016, respectively. Cost of sales was $88,000 in the nine months ended September 30, 2017 and $149,000 in the nine months ended September 30, 2016, respectively. The gross profit margin was approximately 80% in the nine months ended September 30, 2017, compared to 53% in the prior year. Our margins were reduced in the first half of 2016, as we replaced many of our STREAMWAY units for the new iteration units at no charge to our customers. Increased sales will allow us to achieve volume purchasing discounts on both equipment components and our cleaning solution.

~~General and Administrative expense.~~ ~~General and administrative expense primarily consists of management salaries, professional fees, consulting fees, travel expense, administrative fees and general office expenses.~~

General and Administrative (G&A) expenses decreased by $111,000 for the three months ended September 30, 2017 compared to the 2016 period. The decrease in the three-month period was primarily from $190,000 in investor relations incurred during 2016 due to utilizing consultants and proxy solicitors; $29,000 in stock based compensation because of amendments to employee stock options in 2017, and $68,000 in investors stock compensation due to fund raising activities in Q3 of 2016. Offsetting the decrease was an increase in professional fees of $140,000 mostly due to legal fees for the CytoBioscience merger and consulting fees regarding new business development as well as merger and acquisition negotiations and activities. There were increases in recruiting expenses of $15,000, due to a recruitment fee reduced in 2016, $11,000 for salaries, $6,000 for corporate insurance, and state taxes of $5,000.

G&A expenses decreased by $716,000 for the nine months ended September 30, 2017 compared to the 2016 period. The nine month decrease was predominantly from the $1,019,000 severance pay in 2016 for the former CEO, who left the Company in May 2016; legal expense reduced by $483,000 as in 2016 we had a Unit Exchange Offer plus the negotiated settlement with the former CEO; a decrease by $308,000 in investor relations incurred during 2016 due to utilizing consultants and proxy solicitors; salaries, benefits and taxes reduced by $89,000 as the current CEO is not currently on payroll; recruiting fees are reduced by $64,000 due to a fee paid in 2016; additional reduced expenses were for stock based compensation, $58,000 because of amendments to employee stock options in 2017, audit and accounting fees, $6,000, licenses, permits and fees down by $20,000, stock transfer expenses decreased by $9,000, depreciation expense was down by $11,000, travel down by $12,000, and bank charges down by $7,000. Offsets include: $903,000 for investment stock compensation due to the direct registered raise in November of 2016, whereby warrants were issued with a six-month vesting period culminating in May 2017; $287,000 for consulting paid by issuing 143,000 shares of common stock, par value $0.01, to a consulting firm to assist in sales placements; $112,000 in bonuses that were cancelled in 2016 pursuant to the CEO negotiated settlement; for $33,000 in corporate insurance for increased policy rates in 2017, and for $41,000 because of a combination of increased state taxes in 2017 based on stock transactions and less in 2016 due to a reduction for anticipated penalties.

~~Operations expense.~~ ~~Operations expense primarily consists of expenses related to product development and prototyping and testing in the company’s current stage.~~

Operations expense decreased by $100,000 in the three months ended September 30, 2017 compared to the three months ended September 30, 2016. The decreases for the three-month period include $63,000 in stock based compensation resulting from an adjustment to the Company’s vesting expense pursuant to amended employee stock options in 2017; less consulting expenses of $46,000 due to higher 2016 expenses for attaining our CE mark; and, less research and development costs, $10,000. The largest offset was for $9,000 regarding salaries per the hiring of the quality assurance manager in 2017, and $9,000 due to corrections in inventory for obsolescence. Operations expense decreased by $353,000 in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The nine-month reductions were from bonuses, $98,000, from employee stock options exercised in 2016; $106,000 in stock based compensation because of amendments to employee stock options in 2017; $78,000 in lower research and development costs; $11,000 in writing off obsolete inventory; $48,000 in consulting due to higher 2016 expenses for attaining our CE mark, and $6,000 for shipping and postage.

~~Sales and Marketing expense.~~ ~~Sales and marketing expense consists of expenses required to sell products through independent reps, attendance at trades shows, product literature and other sales and marketing activities~~.

Sales and marketing expense increased by $164,000 in the three months ended September 30, 2017 compared to the three months ended September 30, 2016. The increases for the three-month period resulted from expanding our sales force thus payroll, taxes and benefits were higher by $55,000; accordingly, travel expenses were increased as well by $21,000, and commissions were higher by $13,000 due to increased sales in 2017. Additionally, stock based compensation increased by $4,000 due to vesting of stock options, consulting increased by $38,000 due to our hiring an advocate for increasing government sales, public relations increased by $24,000 due to hiring a firm to assist with the proposed CytoBioscience merger, trade shows increased by $7,000 in the Company’s attempt for more exposure, and miscellaneous expenses increased by $4,000 due to higher salesperson credentialing. Offsetting the increases was a reduction in advertising and promotion expenses of $3,000. Sales and marketing expense increased by $332,000 in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The increases for the nine-month period resulted from expanding our sales force thus payroll, taxes and benefits were higher by $210,000; accordingly, travel expenses were increased as well by $65,000, and commissions were higher by $25,000 due to increased sales in 2017. Additionally, stock based compensation increased by $9,000 due to the quarterly vesting of inducement options for our Vice President of Sales. Consulting increased by $8,000 due to our hiring an advocate for increasing government sales, public relations increased by $24,000 due to hiring a firm to assist with the CytoBioscience merger, trade shows increased by $6,000 in the Company’s attempt for more exposure, and miscellaneous expenses increased by $8,000 due to higher salesperson credentialing. Offsetting the increases was a reduction in advertising and promotion expenses, $28,000.

~~Interest expense.~~ ~~There was no interest expense in the first nine months of 2017, and $3.00 in 2016.~~

Effective May 5, 2016, Joshua Kornberg resigned as the Chief Executive Officer and President and an employee of the Company. In connection with Mr. Kornberg’s resignation, the Company and Mr. Kornberg entered into a separation agreement on June 13, 2016 (the “Separation Agreement”). Pursuant to the Separation Agreement, on July 15, 2016, the Company was required to pay Mr. Kornberg: (a) $15,433.20 less any required tax withholdings in a lump sum on July 15, 2016; and (b) $75,000 less any required tax withholdings on July 15, 2016. The Company is required to pay Mr. Kornberg an additional $75,000 less any required tax withholdings payable in 6 monthly installments of $12,500, due on the first regular payday of each month, starting on August 15, 2016; and an additional $450,000 less any required tax withholdings payable in 11 monthly installments of $40,909, due on the first regular payday of each month, starting on February 15, 2017. The Company issued to Mr. Kornberg a restricted stock award (the “Award”) under the Company’s stock incentive plan consisting of 20,000 shares. The award vested on July 15, 2016. The value of the award for purposes of the Separation Agreement (the “Award Value”) is $90,350.61, based on a ten-day volume-weighted average closing sale price per share of the Company’s common stock. Mr. Kornberg agreed that the withholding taxes in connection with the Award will be offset against cash payments otherwise due to him in four monthly installments. In addition, the Company agreed to, at its option, either (a) pay Mr. Kornberg $309,649.39 (the “Additional Cash Amount”), equal to the difference between $400,000 and the Award Value, payable in equal monthly installments of $40,909, due on the first regular payday of each month, starting on January 15, 2018, less any required tax withholding, or (b) issue to Mr. Kornberg shares of common stock of the Company (the “Additional Shares”) on January 15, 2018 with an aggregate fair market equal to the Additional Cash Amount, based on a ten-day volume-weighted average closing sales price per share. Under the Separation Agreement, all of Mr. Kornberg’s outstanding stock options and outstanding restricted stock prior to the date of the Separation Agreement were canceled, consisting of options to purchase 22,085 shares and 2,667 shares of restricted stock. The Separation Agreement included a waiver and release of claims by Mr. Kornberg. He will also continue to be bound by the terms of any restrictive covenant agreements he had with the Company.

The foregoing summary of the Separation Agreement does not purport to be complete and is qualified in its entirety be reference to the Separation Agreement, a copy of which was filed on June 17, 2016, as an exhibit to our Current Report on Form 8-K.

Net cash used in operating activities was $3,137,309 for the nine months ended September 30, 2017 compared with net cash used of $3,704,307 for the 2016 period. The $567,000 decrease in cash used in operating activities was primarily due an increase to vested stock option accounts from warrants issued in the 2017 public offering and by the reduced net loss in 2017. Offsets were decreases in payables, accruals, common stock issuance and equity instruments issued.

Cash flows used in investing activities was $1,676,015 for the nine months ended September 30, 2017 and $603,700 for the nine months ended September 30, 2016. The Company invested in certificates of deposits specifically maintaining balances below $250,000 in each certificate to maintain FDIC banking protection. There was a moderate increase to purchases in fixed assets and minimal fees related to patents, and an increase in notes receivable

Net cash provided by financing activities was $3,814,938 for the nine months ended September 30, 2017 compared to net cash provided of $86,253 for the nine months ended September 30, 2016. The cash provided came from the net proceeds of the January public offering and the over-allotment option exercise by the underwriter.

Our cash and cash equivalents were approximately $766,000 as of September 30, 2017, with certificates of deposit of approximately $1,225,000. We had a cash balance of $425,000 as of September 30, 2017, with the remainder of our cash equivalents in money market accounts. Since our inception, we have incurred significant losses. As of September 30, 2017, we had an accumulated deficit of approximately $51,896,000.

From inception to September 30, 2017, our operations have been funded through a bank loan and private convertible debt of approximately $5,435,000 and equity investments totaling approximately $27,766,000.

~~In the first nine months of 2017, we recognized $435,000 in revenues. Our product sales since the end of the third quarter have resulted in approximately $93,000 in revenues.~~

Since our inception, we have incurred significant losses, and our accumulated deficit was approximately $51.9 million as of September 30, 2017. Our operations from inception have been funded with private placements of convertible debt securities and equity securities, in addition to a past bank loan (not currently outstanding) and a qualified public offering raising a net $13,555,003 in 2015, after deducting underwriting discounts, commissions and expenses. As of September 30, 2017, the Company had no debt. On November 29, 2016, the Company closed a registered direct offering for net proceeds of $1,739,770. On January 19, 2017, the Company closed on an underwritten public offering with net proceeds of $3,439,125. Additionally, as part of the offering there was an over-allotment option that was exercised by the underwriter netting the Company $356,563.

~~We have not achieved profitability and anticipate that we will continue to incur net losses at least through the end of 2017.~~

We had revenues of $435,000 in the first nine months of 2017, but we had negative operating cash flows of $3,100,000. The negative cash flow is heavily impacted by our losses in the nine-month period of $4,878,000 which reflected $2,150,000 of non-cash vesting expenses for warrants issued in conjunction with the registered direct offering and the public offering completed in 2016 and 2017, respectively. Our cash balance was $425,092 as of September 30, 2017, with $1,565,000 in cash equivalents and certificates of deposit, and our accounts payable and accrued expenses were an aggregate $1,217,000. We are currently incurring negative operating cash flows of approximately $365,000 per month. Although we are attempting to curtail our operating expenses for our core business, there is no guarantee that we will be able to reduce these expenses significantly, and expenses for some periods may be higher as we prepare our product for broader sales, increase our sales efforts and maintain adequate inventories. Further, our anticipated entry into the international marketplace will require additional cash expenditures.

In addition, as stated in “Strategic Relationships and Transactions” above, we have made total advances of $1,070,000 to CytoBioscience and $175,000 to Helomics through the date of this filing. We expect that we will need to make further advances to meet operating needs of those parties, and to further the strategic partnerships with those companies. Such advances further deplete our cash resources, and we anticipate additional funding challenges relating to other potential acquisitions and strategic relationships as we continue to fund our operations, strategic partnerships and acquisition activities. We will attempt to raise the necessary funds through equity or debt financing, alternative offerings or other means. If we are successful in securing adequate funding we plan to make significant capital or equipment investments, and we will also continue to make human resource additions over the next 12 months. Such additional financing will be dilutive to existing stockholders, and there is no assurance that such financing will be available upon acceptable terms. If such financing or adequate funds from operations are not available, we will be forced to limit our business activities, which will have a material adverse effect on our results of operations and financial condition.

As a result of the above factors, our independent registered public accounting firm has indicated in their audit opinion, contained in our financial statements included in this annual report on Form 10-K, that they have serious doubts about our ability to continue as a going concern. The financial statements have been prepared assuming the Company will continue as a going concern.

On January 13, 2017, the Company announced the pricing of a firm commitment underwritten public offering of 1,750,000 Units at an offering price of $2.25 per Unit, with each Unit consisting of one share of the Company’s common stock and 0.2 of a Series D Warrant, with each whole Series D Warrant purchasing one share of our common stock at an exercise price $2.25 per whole share. The shares of common stock and the Series D Warrants were immediately separable and were issued separately. Gross proceeds to the Company from the offering was approximately $3,937,500 before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The Company has granted the underwriter a 45-day option to purchase an additional (i) up to 175,000 additional shares of common stock at the public offering price per unit less the price per warrant included in the unit and less the underwriting discount and/or (ii) additional warrants to purchase up to 35,000 additional shares of common stock at a purchase price of $0.01 per warrant to cover over-allotments, if any. The offering closed on January 19, 2017. The underwriter exercised this option, and on February 22, 2017, the Company received net proceeds of approximately $358,312.

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

~~We have not engaged in any off-balance sheet activities as defined in Item 303(a)(4) of Regulation S-K.~~

~~Critical Accounting Policies and Estimates and Recent Accounting Developments~~

~~The~~ discussion and analysis ofshould be read together with our financial condition and results of operations are based upon our audited Financial Statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of theseunaudited condensed consolidated financial statements ~~requires management to make estimates~~ and assumptions that affect the reported amounts of assets and liabilities as of the date of our financial statements, the reported amounts of revenues and expenses during the reporting periods presented, as well as our disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions, including, but not limited to, fair value of stock-based compensation, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, income taxes, and contingencies and litigation.

We base our estimates and assumptions on our historical experience. We also used any other pertinent information available to us at the time that these estimates and assumptions are made. We believe that these estimates and assumptions are reasonable under the circumstances and form the basis for our making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources. Actual results and outcomes could differ from our estimates.

~~Our significant accounting policies are described~~related notes thereto set forth in “Note 1 – Summary of Significant Accounting Policies,” in Notes to Financial Statements of this Quarterly Report on Form 10-Q. We believe that the following discussion addresses our critical accounting policies and reflects those areas that require more significant judgments, and use of estimates and assumptions in the preparation of our Financial Statements.

~~Revenue Recognition.~~ ~~We recognize revenue in accordance with the SEC’s Staff Accounting Bulletin Topic 13 Revenue Recognition and ASC 605 – Revenue Recognition.~~

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable and collectability is probable. Delivery is considered to have occurred upon either shipment of the product or arrival at its destination based on the shipping terms of the transaction. Our standard terms specify that shipment is FOB Skyline and we will, therefore, recognize revenue upon shipment in most cases. This revenue recognition policy applies to shipments of our STREAMWAY SYSTEM units as well as shipments of cleaning solution and filters. When these conditions are satisfied, we recognize gross product revenue, which is the price we charge generally to our customers for a particular product. Under our standard terms and conditions, there is no provision for installation or acceptance of the product to take place prior to the obligation of the customer. The customer’s right of return is limited only to our standard one-year warranty, whereby we replace or repair, at our option. We believe it would be rare that the STREAMWAY SYSTEM unit or significant quantities of cleaning solution or filters may be returned. Additionally, since we buy both the STREAMWAY SYSTEM units, cleaning solution, and filters from “turnkey” suppliers, we would have the right to replacements from the suppliers if this situation should occur.

~~Stock-Based Compensation~~. Effective January 1, 2006, we adopted ASC 718- Compensation-Stock Compensation (“ASC 718”). Under ASC 718 stock-based employee compensation cost is recognized using the fair value based method for all new awards granted after January 1, 2006 and unvested awards outstanding at January 1, 2006. Compensation costs for unvested stock options and non-vested awards that were outstanding at January 1, 2006, are being recognized over the requisite service period based on the grant-date fair value of those options and awards, using a straight-line method. We elected the modified-prospective method in adopting ASC 718 under which prior periods are not retroactively restated.

ASC 718 requires companies to estimate the fair value of stock-based payment awards on the date of grant using an option-pricing model. We use the Black-Scholes option-pricing model which requires the input of significant assumptions including an estimate of the average period of time employees and directors will retain vested stock options before exercising them, the estimated volatility of our common stock price over the expected term, the number of options that will ultimately be forfeited before completing vesting requirements and the risk-free interest rate.

Because we do not have significant historical trading data on our common stock we relied upon trading data from a composite of 10 medical companies traded on major exchanges and 15 medical companies quoted by the OTC Bulletin Board to help us arrive at expectations as to volatility of our own stock when public trading commences. In 2013 the Company experienced significant exercises of options and warrants. The options raised $6,500 in capital. Warrants exercised for cash produced $1,330,000 of capital. In the case of options and warrants issued to consultants and investors we used the legal term of the option/warrant as the estimated term unless there was a compelling reason to use a shorter term. The measurement date for employee and non-employee options and warrants is the grant date of the option or warrant. The vesting period for options that contain service conditions is based upon management’s best estimate as to when the applicable service conditions will be achieved. Changes in the assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related expense recognized. The assumptions we use in calculating the fair value of stock-based payment awards represent our best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and we use different assumptions, our equity-based compensation expense could be materially different in the future. See “Note 2 – Stockholders’ Equity, Stock Options and Warrants” in Notes to Financial Statements of this Quarterly Report on Form 10-Q ~~for additional information.~~

When an option or warrant is granted in place of cash compensation for services, we deem the value of the service rendered to be the value of the option or warrant. In most cases, however, an option or warrant is granted in addition to other forms of compensation and its separate value is difficult to determine without utilizing an option pricing model. For that reason we also use the Black-Scholes option-pricing model to value options and warrants granted to non-employees, which requires the input of significant assumptions including an estimate of the average period that investors or consultants will retain vested stock options and warrants before exercising them, the estimated volatility ofas well as our common stock price over the expected term, the number of options and warrants that will ultimately be forfeited before completing vesting requirements and the risk-free interest rate. Changes in the assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related expense recognizes that. Since we have no trading history in our common stock and no first-hand experience with how our investors and consultants have acted in similar circumstances, the assumptions we use in calculating the fair value of stock-based payment awards represent our best estimates, which involve inherent uncertainties and the application of management's judgment. As a result, if factors change and we use different assumptions, our equity-based consulting and interest expense could be materially different in the future.

Since our common stock has no significant public trading history we were required to take an alternative approach to estimating future volatility and the future results could vary significantly from our estimates. We compiled historical volatilities over a period of 2 to 7 years of 10 small-cap medical companies traded on major exchanges and 15 medical companies in the middle of the market cap size range on the OTC Bulletin Board and combined the results using a weighted average approach. In the case of standard options to employees we determined the expected life to be the midpoint between the vesting term and the legal term. In the case of options or warrants granted to non-employees, we estimated the life to be the legal term unless there was a compelling reason to make it shorter.

~~We review identifiable intangible assets for impairment in accordance with ASC 350-~~ ~~Intangibles – Goodwill and Other,~~ whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Our intangible assets are currently solely the costs of obtaining trademarks and patents. Events or changes in circumstances that indicate the carrying amount may not be recoverable include, but are not limited to, a significant change in the medical device marketplace and a significant adverse change in the business climate in which we operate. If such events or changes in circumstances are present, the undiscounted cash flows method is used to determine whether the intangible asset is impaired. Cash flows would include the estimated terminal value of the asset and exclude any interest charges. If the carrying value of the asset exceeds the undiscounted cash flows over the estimated remaining life of the asset, the asset is considered impaired, and the impairment is measured by reducing the carrying value of the asset to its fair value using the discounted cash flows method. The discount rate utilized is based on management's best estimate of the related risks and return at the time the impairment assessment is made. The balance represented intellectual property in the form of patents for our original STREAMWAY product. The Company’s enhanced STREAMWAY product has a new patent pending, see “Patents and Intellectual Property.”

~~See Note 1 - “Summary of Significant Accounting Policies” to the Condensed Financial Statements of this Quarterly~~Annual Report on Form ~~10-Q~~10-K for ~~a discussion of recent accounting developments.~~

~~Information Regarding Forward-Looking Statements~~the year ended December 31, 2019.

This Form 10-Q contains “forward-looking statements” that indicate certain risks and uncertainties, ~~related to the Company,~~ many of which are beyond ~~the Company’s~~our control. ~~The Company’s actual~~Actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors, including those set forth below and elsewhere in this report. Important factors that may cause actual results to differ from projections include:

All statements, other than statements of historical facts, included in this report regarding ~~the Company’s~~our growth strategy, future operations, financial position, estimated revenue or losses, projected costs, prospects and plans, and objectives of management are forward-looking statements. When used in this report, the words ~~“will”, “may”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, “plan”~~“will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “plan,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this report. ~~The Company does~~We do not undertake any obligation to update any forward-looking statements or other information contained herein. Potential investors should not place undue reliance on these forward-looking statements. Although ~~Skyline believes~~we believe that ~~its~~our plans, intentions, and expectations reflected in or suggested by the forward-looking statements in this report are reasonable, ~~the Company~~we cannot assure potential investors that these plans, intentions or expectations will be achieved. ~~The Company discloses~~We disclose important factors that could cause ~~the Company’s~~ actual results to differ materially from ~~its~~ expectations in the “Risk Factors” section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2016. The Company also included updated risk factors, including risks related to the proposed merger transaction with CytoBioscience, as Exhibit 99.3 to its Current Report on Form 8-K filed on August 1, 2017.2019 and in item 1A of Part II below. These cautionary statements qualify all forward-looking statements attributable to ~~the Company~~us or persons acting on ~~its~~our behalf.

Information regarding market and industry statistics contained in this report ~~are~~is included based on information available to ~~the Company~~us that ~~it believes~~we believe is accurate. It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis. ~~The Company has~~We have not reviewed or included data from all sources, and ~~the Company~~we cannot assure potential investors of the accuracy or completeness of the data included in this report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue, and market acceptance of products and services. ~~The Company has~~We have no obligation to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those statements.

We operate in two primary business areas: first, application of artificial intelligence (“AI”) in our precision medicine business, to provide AI-driven predictive models of tumor drug response to improve clinical outcomes for patients and to assist pharmaceutical, diagnostic, and biotech industries in the development of new personalized drugs and diagnostics; and second, production of the United States Food and Drug Administration (“FDA”)-cleared STREAMWAY® System for automated, direct-to-drain medical fluid disposal and associated products.

We have three operating segments: Skyline, Helomics and Soluble. Skyline consist of the STREAMWAY System product sales. The Helomics segment consists of clinical testing and contract research. Soluble segment consists of contract services and research focused on solubility improvements, stability studies, and protein production. Our TumorGenesis subsidiary is included within corporate. Going forward, we have determined that we will focus our resources on the Helomics segment and our primary mission of applying AI to precision medicine and drug discovery.

Our precision medicine business, conducted primarily in our Helomics division, is committed to improving the effectiveness of cancer therapy using our proprietary, multi-omic tumor profiling platform, one-of-a-kind database of historical tumor data, and the power of AI to build predictive models of tumor drug response.

Helomics’ mission is to improve clinical outcomes for patients by partnering with pharmaceutical, diagnostic, and academic organizations to bring innovative clinical products and technologies to the marketplace. In addition to our proprietary patient-derived (“PDx”) tumor profiling platform for oncology, Helomics offers: 1) data and AI driven contract research organization (“CRO”) services for clinical and translational research that leverage PDx tumor models, 2) a wide range of multi-omics assays (genomics, proteomics, and biochemical), and 3) AI driven predictive models to drive the discovery of targeted therapies.

We believe leveraging our unique, historical database of the drug responses of over 149,000 patient tumors to build AI and data-driven multi-omic predictive models of tumor drug response and outcome will provide actionable insights critical to both new drug development and individualizing patient treatment. Our large historical database of tumors and related data, plus our ability to obtain the associated patient outcome data is a significant competitive advantage. Cancer treatments require at least 5 years of testing to provide sufficient information on progression-free survival rates. While competitors must wait for this data, we can leverage it today. These AI-driven predictive models, coupled with the PDx platform will create a unique service to drive revenue generating projects with pharma, diagnostic and biotech companies in areas such as biomarker discovery, drug screening, drug repurposing, and clinical trials. The AI-driven models will, once validated, also provide clinical decision support to help oncologists individualize treatment.

Our CRO/AI business is committed to improving the process of targeted therapy discovery. Our proprietary, TruTumor multi-omic PDx profiling and AI platform coupled to our vast multi-omic database of biochemical and clinical information on patients with cancer, uses deep learning to understand the association between the mutational profile of a patient’s tumor and the drug response profile of the tumor that is grown in the lab. This approach is used to build an AI-driven predictive model that offers actionable insights of which mutations in the tumor are associated with drugs to which the tumor is sensitive and which will lead to the optimal outcome for the patient.

Our CRO services business applies these AI-driven predictive models coupled with our unique proprietary TruTumor PDx model to address a range of needs from discovery through clinical and translational research, to clinical trials and diagnostic development and validation as noted below:

On July 1, 2020, the Company acquired the assets of Quantitative Medicine LLC including a novel, computational drug discovery platform called CoRE. CoRE which is designed to dramatically reduce the time, cost, and financial risk of discovering new therapeutic drugs by predicting the main effects of drugs on target molecules that mediate disease. By coupling CoRE, with Helomics’ TruTumor™ PDx tumor platform, Helomics multi-omic database of biochemical and clinical information on patients with cancer, and AI-driven predictive models, we will offer a novel, one-of-a-kind capability for discovery of precision therapies that are expected to have considerable value to the industry.

Via our Helomics subsidiary, we offer a group of clinically relevant, cancer-related tumor profiling and biomarker tests for gynecological cancers that determine how likely the patient is to respond to various types of chemotherapy and which therapies might be indicated by relevant tumor biomarkers.

Clinical testing is comprised of ChemoFx and BioSpeciFx tests. The ChemoFx test determines how a patient’s tumor specimen responds to a panel of various chemotherapy drugs, while the BioSpeciFx test evaluates the expression of a specific genes, or biomarkers, in the patient’s tumor. Our proprietary TruTumor™ PDx tumor platform provides us with the ability to work with actual live tumor cells to study the unique biology of the patient’s tumor in order to understand how the patient responds to treatment.

Our subsidiary, TumorGenesis, is pursuing a new rapid approach to growing tumors in the laboratory, which essentially “fools” the cancer cells into thinking they are still growing inside the patient. We have also announced a proposed joint venture with GLG Pharma focused on using their combined technologies to bring personalized medicines and testing to ovarian and breast cancer patients, especially those who present with ascites fluid (over one-third of patients).

Sold through our subsidiary, Skyline Medical, Inc (“Skyline Medical”), the STREAMWAY System virtually eliminates staff exposure to blood, irrigation fluid and other potentially infectious fluids found in the healthcare environment. Antiquated manual fluid handling methods that require hand carrying and emptying filled fluid canisters present both an exposure risk and potential liability. Skyline Medical’s STREAMWAY System fully automates the collection, measurement, and disposal of waste fluids and is designed to: 1) reduce overhead costs to hospitals and surgical centers; 2) improve compliance with the Occupational Safety and Health Administration and other regulatory agency safety guidelines; 3) improve efficiency in the operating room and radiology and endoscopy departments, thereby leading to greater profitability; and 4) provide greater environmental stewardship by helping to eliminate the approximately 50 million potentially disease-infected canisters that go into landfills each year in the United States.

In December 2019, we announced that we had received indications of interest from several parties for the possible acquisition of our Skyline Medical division, and we reaffirmed that we are focusing our resources on our precision medicine business. We continue to operate the Skyline Medical business with a focus on maximizing our strategic opportunities with respect to this division.

Our domestic and international segments consist primarily of sales of the STREAMWAY System, as well as sales of the proprietary cleaning fluid and filters for use with the STREAMWAY System. We manufacture an environmentally conscious system for the collection and disposal of infectious fluids resulting from surgical and other medical procedures. We have been granted patents for the STREAMWAY System in the United States, Canada, and Europe. We distribute our products to medical facilities where bodily and irrigation fluids produced during medical procedures must be contained, measured, documented, and disposed. Our products minimize the exposure potential to the healthcare workers who handle such fluids. In addition to simplifying the handling of these fluids, our goal is to create products that dramatically reduce staff exposure without significant changes to established operative procedures, historically a major industry stumbling block to innovation and product introduction.

We sell our medical device products directly to hospitals and other medical facilities using employed sales representatives, independent contractors and distributors.

Since inception, we have been unprofitable. We incurred net losses of $(6,307,726) and $(14,414,421) for the three and nine months ended September 30, 2020, respectively and incurred net losses of $(4,008,512) and $(5,836,592) for the three and nine months ended September 30, 2019. As of September 30, 2020, and December 31, 2019, we had an accumulated deficit of $96,913,132 and $82,498,711, respectively.

We have never generated sufficient revenues to fund our capital requirements. From 2009 through 2018, we built the Skyline Medical business, building a national sales network and international sales. However, the Skyline Medical business has never reached profitability. In 2017, we determined to diversify our business by investing in ventures in the precision medicine business, including making significant loans and investments in early stage companies. These activities led to the acquisition of Helomics in April 2019, which has accelerated our capital needs further. We have funded our operations through a variety of debt and equity instruments. See “Liquidity and Capital Resources – Plan of Financing; Going Concern Qualification” and “Liquidity and Capital Resources –Financing Transactions” below.

Our future cash requirements and the adequacy of available funds depend on our ability to generate revenues from our Helomics segment; to continue to sell our Skyline Medical products and attempt to reach profitability in the Skyline Medical business and the availability of future financing to fulfill our business plans. See “Plan of Financing; Going Concern Qualification” below.

Our limited history of operations, especially in our precision medicine business, and our change in the emphasis of our business, makes prediction of future operating results difficult. We believe that period to period comparisons of our operating results should not be relied on as predictive of our future results.

Comparison of three and nine months ended September 30, 2020 and September 30, 2019

Delaware		33-1007393
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2915 Commers Drive, Suite 900		Eagan, Minnesota 55121
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	POAI	Nasdaq Capital Market

Large accelerated filer ¨☐	Accelerated filer ¨
	☐
Non-accelerated filer ¨ ~~(Do not check if a smaller reporting company)~~☒	Smaller reporting company x☒
	Emerging growth company ¨☐

	As of September 30, 2020		As of December 31, 2019
Computers, software and office equipment	$	1,862,669	$	508,143
Leasehold improvements		216,514		188,014
Laboratory equipment		2,612,403		1,401,210
Manufacturing tooling		108,955		108,956
Demo equipment		69,606		73,051
Total		4,870,146		2,279,373
Less: Accumulated depreciation		1,114,682		771,574
Total Fixed Assets, Net	$	3,755,464	$	1,507,799

	As of September 30, 2020							As of December 31, 2019

		Gross Carrying Costs		Accumulated Amortization			Net Carrying Amount		Gross Carrying Costs		Accumulated Amortization			Net Carrying Amount
Patents & Trademarks	$	384,885	$	(206,908	)	$	177,977	$	339,023	$	(195,286	)	$	143,737
Developed Technology		2,882,000		(216,150	)		2,665,850		2,882,000		(108,075	)		2,773,925
Customer Relationships		445,000		(222,500	)		222,500		445,000		(111,250	)		333,750
Tradename		398,000		-			398,000		398,000		-			398,000
Total	$	4,109,885	$	(645,558	)	$	3,464,327	$	4,064,023	$	(414,611	)	$	3,649,412


(Former name, former address and former fiscal year, if changed since last report)

	September 30, 2020			December 31, 2019
		(unaudited)			(audited)
ASSETS
Current Assets:
Cash	$	2,474,312		$	150,831
Accounts Receivable		508,265			297,055
Inventories		205,908			190,156
Prepaid Expense and Other Assets		269,282			160,222
Total Current Assets		3,457,767			798,264

Fixed Assets, net		3,755,464			1,507,799
Intangibles, net		3,464,327			3,649,412
Lease Right-of-Use Assets		1,790,130			729,745
Goodwill		12,693,290			15,690,290
Total Assets	$	25,160,978			22,375,510

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	1,628,944		$	3,155,641
Notes Payable – Net of Discounts of $495,100 and $350,426		5,751,876			4,795,800
Accrued Expenses		2,530,385			2,371,633
Derivative Liability		1,052,494			50,989
Deferred Revenue		66,123			40,384
Lease Liability		577,505			459,481
Total Current Liabilities		11,607,327			10,873,928

Lease Liability – Net of current portion		1,221,806			270,264
Other long-term liabilities		95,079			-
Total Liabilities		12,924,212			11,144,192

Stockholders’ Equity:
Preferred Stock, 20,000,000 authorized inclusive of designated below
Series B Convertible Preferred Stock, $.01 par value, 2,300,000 shares authorized, 79,246 and 79,246 shares outstanding		792			792
Series D Convertible Preferred Stock, $.01 par value, 3,500,000 shares authorized, 0 and 3,500,000 outstanding		-			35,000
Series E Convertible Preferred Stock, $.01 par value, 350 shares authorized, 0 and 258 outstanding		-			3
Common Stock, $.01 par value, 100,000,000 shares authorized, 16,593,283 and 4,056,652 outstanding		165,932			40,567
Additional paid-in capital		108,983,174			93,653,667
Accumulated Deficit		(96,913,132	)		(82,498,711	)

Total Stockholders' Equity		12,236,766			11,231,318

Total Liabilities and Stockholders' Equity	$	25,160,978		$	22,375,510

	September 30, 2017			December 31, 2016

Current Assets:
Cash and Cash Equivalents	$	765,704		$	1,764,090
Certificates of Deposit		1,224,728			100,000
Marketable Securities		-			284,329
Accounts Receivable		91,708			38,919
Notes Receivable (Note 3)		785,000			-
Inventories		238,889			272,208
Prepaid Expense and other assets		196,825			148,637
Total Current Assets		3,302,854			2,608,183

Fixed Assets, net		99,982			101,496
Intangibles, net		96,501			97,867

Total Assets	$	3,499,337		$	2,807,546

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	74,642		$	220,112
Accrued Expenses		1,132,613			1,346,105
Deferred Revenue		10,185			7,998
Total Current Liabilities		1,217,440			1,574,215

Accrued Expenses		-			309,649
Total Liabilities		1,217,440			1,883,864
Commitments and Contingencies		-			-
Stockholders’ Equity:
Series B Convertible Preferred Stock, $.01 par value, 20,000,000 authorized, 79,246 and 79,246 outstanding		792			792
Common Stock, $.01 par value, 24,000,000 authorized, 6,232,761 and 4,564,428 outstanding		62,327			45,644
Additional paid-in capital		54,114,771			47,894,196
Accumulated Deficit		(51,895,993	)		(47,018,451	)
Accumulated Other Comprehensive Income		-			1,501
Total Stockholders' Equity		2,281,897			923,682

Total Liabilities and Stockholders' Equity	$	3,499,337		$	2,807,546

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Revenue	$	480,757		$	522,696		$	958,484		$	1,064,088
Cost of goods sold		175,206			208,096			353,124			400,202
Gross margin		305,551			314,600			605,360			663,886

General and administrative expense		2,226,634			2,616,991			8,266,927			7,425,305
Operations expense		568,766			707,414			1,638,635			2,445,238
Sales and marketing expense		121,514			434,955			518,938			1,674,200
Loss on goodwill impairment		2,997,000			-			2,997,000			-
Total operating loss		(5,608,363	)		(3,444,760	)		(12,816,140	)		(10,880,857	)

Gain on revaluation of cash advances to Helomics		-			-			-			1,222,244
Other income		44,926			15,084			97,894			65,293
Other expense		(2,147,057	)		(894,811	)		(3,993,969	)		(2,052,522	)
Gain on derivative instruments		1,402,768			315,975			1,007,794			84,627
Gain on notes receivables associated with asset purchase		-			-			1,290,000			-
Loss on equity method investment		-			-			-			439,637
Gain on revaluation of equity method in investment		-			-			-			6,164,260
Net loss	$	(6,307,726	)	$	(4,008,512	)	$	(14,414,421	)	$	(5,836,592	)
Deemed dividend		554,287			125,801			554,287			146,199
Net loss attributable to common shareholders per common shares-basic and diluted	$	(6,862,013	)	$	(4,134,313	)	$	(14,968,708	)	$	(5,982,791	)
Loss per common share basic and diluted	$	(0.46	)	$	(1.31	)	$	(1.51	)	$	(2.32	)
Weighted average shared used in computation – basic and diluted		15,026,789			3,146,609			9,935,738			2,581,014

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue	$	152,535		$	134,605		$	434,523		$	316,931

Cost of goods sold		28,706			26,481			87,709			149,130

Gross margin		123,829			108,124			346,814			167,801

General and administrative expense		621,716			733,074			3,968,493			4,684,130

Operations expense		192,536			292,856			575,467			928,062

Sales and marketing expense		301,672			137,784			680,396			348,848

Interest expense		-			3			-			3

Total Expense		1,115,924			1,163,717			5,224,356			5,961,043

Net loss available to common shareholders		(992,095	)		(1,055,593	)		(4,877,542	)		(5,793,242	)

Other comprehensive gain
Unrealized gain from marketable securities		-			(1,299	)		-			4,579

Comprehensive (loss)	$	(992,095	)	$	(1,056,892	)	$	(4,877,542	)	$	(5,788,663	)

Loss per common share - basic and diluted	$	(0.16	)	$	(0.32	)	$	(0.78	)	$	(2.57	)

Weighted average shares used in computation - basic and diluted		6,232,761			3,320,139			6,283,567			2,250,315

				Common Stock
	Preferred Stock			Shares			Amount			Paid-in Capital			Deficit			Accumulated Other Comprehensive Income			Total
Balance at 12/31/2015	$	18,950			208,259		$	2,080		$	44,584,118		$	(40,492,437	)		-		$	4,112,711
Shares issued for two options exercised at $65.75 per share					1,312			13			86,240									86,253
Shares issued for preferred stock conversion into common stock per the break-up of the Unit from the 2015 public offering		(18,158	)		66,396			664			17,494									-
Shares issued for cashless Series A warrant exercises per the break-up of the Unit from the 2015 public offering					2,318,663			23,187			556,479									579,666
Shares issued for cashless Series B warrant exercises per the tender offer exchange					628,237			6,282			150,777									157,059
Shares issued at $3.75 per share, to an investment banker per contractual agreement					135,995			1,360			508,620									509,980
Shares issued at $4.50 per share to former CEO per severance agreement					20,000			200			90,151									90,351
Vesting Expense											165,271									165,271
Unrealized gain from marketable securities																	1,501			1,501
Shares issued at $4.50 per share to investor relations consultant					26,000			260			116,740									117,000
Shares issued for escrow with GLG Pharma pursuant to the partnership and reseller agreement					400,000			4,000												4,000
Shares issued pursuant to the Registered Direct Offering, net					756,999			7,570			1,618,335									1,625,905
Corrections due to rounding for reverse split and DTCC increase					2,567			28			(29	)								(1	)
Net loss														(6,526,014	)					(6,526,014	)
Balance @ 12/31/2016	$	792			4,564,428		$	45,644		$	47,894,196		$	(47,018,451	)	$	1,501		$	923,682
Shares issued pursuant to the public offering, net					1,750,000			17,500			3,403,688									3,421,188
Shares issued pursuant to the overallotment agreement in the public offering					175,000			1,750			392,000									393,750
Vesting Expense											2,142,189									2,142,189
Reverse shares issued for escrow with GLG Pharma pursuant to termination agreement					(400,000	)		(4,000	)											(4,000	)
Shares issued pursuant to consulting agreement					100,000			1,000			219,000									220,000
Unrealized gain (loss) from marketable securities																	(1,501	)		(1,501	)
Shares issued pursuant to consulting agreement					43,333			433			63,699									64,132
Net loss														(4,877,542	)					(4,877,542	)
Balance @ 9/30/2017	$	792			6,232,761		$	62,327		$	54,114,771		$	(51,895,993	)	$	-		$	2,281,897


	Series B Preferred				Series D Preferred						Series E Preferred						Common Stock				Additional Paid-In			Accumulated
	Shares		Amount		Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit			Total
Balance at 12/31/2019		79,246	$	792		3,500,000		$	35,000			258		$	3			4,056,652	$	40,567	$	93,653,667		$	(82,498,711	)	$	11,231,318
Shares issued pursuant to CEO exchange agreement																		50,000		500		129,500						130,000
Inducement shares issued pursuant to promissory note extension																		30,000		300		40,950						41,250
Issuance of shares and prefunded warrants pursuant to March 2020 private placement																		260,000		2,600		455,223						457,823
Inducement shares issued pursuant to 2020 convertible debt and warrants																		46,875		468		119,532						120,000
Warrants issued pursuant to 2020 convertible debt																						116,951						116,951
Shares issued pursuant to note conversions - bridge loan																		170,000		1,700		265,628						267,328
Shares issued pursuant to series E preferred stock conversions												(50	)		(1	)		141,191		1,412		(1,411	)					-
Shares issued pursuant to Equity Line																		943,000		9,430		1,860,469						1,869,899
Shares issued to consultant and other																		155,000		1,550		360,750						362,300
Vesting expense																						287,838						287,838
Net loss																									(4,529,317	)		(4,529,317	)
Balance at 03/31/2020		79,246	$	792		3,500,000		$	35,000			208		$	2			5,852,718	$	58,527	$	97,289,097		$	(87,028,028	)	$	10,355,390
Warrants issued pursuant to 2020 convertible debt																						62,373						62,373
Shares issued pursuant to CEO note conversion and accrued interest and exchange agreement																		1,533,481		15,335		2,177,543						2,192,878
Shares issued pursuant to series E preferred stock conversions												(208	)		(2	)		1,257,416		12,574		(12,572	)					-
Shares issued pursuant to series D preferred stock conversions						(3,500,000	)		(35,000	)								350,004		3,500		31,500						-
Issuance of shares from prefunded warrant exercises																		1,390,166		13,902		(13,148	)					754
Issuance of shares pursuant to May 2020 offering, net																		1,396,826		13,968		591,949						605,917
Shares issued in connection with asset purchase agreement																		115,000		1,150		185,150						186,300
Exercise of warrants and issuance of new warrants June 2020, net																		1,274,826		12,748		1,682,237						1,694,985
Director compensation																		20,350		204		34,796						35,000
Vesting expense																						134,939						134,939
Net Loss																									(3,577,378	)		(3,577,378	)
Balance at 06/30/20		79,246	$	792		-		$	-			-		$	-			13,190,787	$	131,908	$	102,163,864		$	(90,605,406	)	$	11,691,158
Shares issued in connection with asset purchase agreement																		954,719		9,547		1,460.720						1,470,267
Repricing and Reclassification of warrants issued pursuant to convertible debt																						1,865,953						1,865,953
Repricing and Reclassification of June 2020 warrants																						803,455						803,455
Exercise of warrants																		122,000		1,220		190,930						192,150
Share issuance to consultant and other																		2,669		26		3,005						3,031
Shares issued pursuant to Equity Line																		2,307,000		23,070		2,336,733						2,359,803
Director Compensation																		16,108		161		23,839						24,000
Vesting expense and option repricing																						134,675						134,675
Net loss																									(6,307,726	)		(6,307,726	)
Balance at 09/30/20		79,246	$	792		-		$	-			-		$	-			16,593,283	$	165,932	$	108,983,174		$	(96,913,132	)	$	12,236,766

	September 30, 2017		December 31, 2016

Finished goods	$	28,441	$	38,201
Raw materials		163,295		165,812
Work-In-Process		47,153		68,195
Total	$	238,889	$	272,208

	Years			Years
Computers and office equipment	3	-	7
Computers, software and office equipment				3	-	10
Leasehold improvements(1)		5			5
Manufacturing tooling	3	-	7	3	-	7
Demo Equipment		3
Laboratory equipment				4	-	6
Demo equipment					3

Goodwill balance at December 31, 2019	$	15,690,290
Impairment		(2,997,000	)
Goodwill balance at September 30, 2020	$	12,693,290

	Nine Months Ended September 30,
	2020			2019
	Stock Options
Expected dividend yield		0.0%			0.0%
Expected stock price volatility	82.6%	-	87%	78.6%	-	82.4%
Risk-free interest rate	0.13%	-	1.78%	1.5%	-	2.76%
Expected life (years)		10			10

	Warrants
Expected dividend yield		0.0%			0.0%
Expected stock price volatility	82.6%	-	87%	78.6%	-	82.4%
Risk-free interest rate	0.135%	-	0.79%	1.39%	-	2.58%
Expected life (years)	5	/	5.5		5

	As of September 30, 2020		As of December 31, 2019

Finished goods	$	118,059	$	91,410
Raw materials		87,849		69,821
Work-In-Process		-		28,925
Total	$	205,908	$	190,156

Year ending December 31,	Expense
2020	$	82,429
2021		329,715
2022		218,465
2023		181,381
2024		181,381
Thereafter		2,470,956
Total	$	3,464,327

	Due Date	As of September 30, 2020		As of December 31, 2019
Bridge loan	March 31, 2021	$	1,721,776	$	1,989,104
Promissory note 2019	March 31, 2021		2,015,833		680,833
Promissory note 2020	March 31, 2021		1,967,500		-
Paycheck Protection Plan	April 20, 2022		541,867
Short term borrowing	May 26, 2020		-		18,563
Short term borrowing	June 10, 2020		-		147,783
Short term borrowing	June 20, 2020		-		194,943
Dr. Schwartz notes	September 30, 2020		-		2,115,000
Total Notes Payable, gross			6,246,976		5,146,226
Less: Unamortized discount			495,100		350,426
Total Notes Payable, net		$	5,751,876	$	4,795,800

	Stock Options					Warrants
	Number of Shares			Average Exercise Price		Number of Shares			Average Exercise Price
Outstanding at December 31, 2015		31,350		$	133.23		323,099		$	128.40

Issued		157,982			3.14		1,487,881			0.71
Expired		(22,377	)		122.13		-			-
Exercised		(1,312	)		65.75		(939,879	)		-

Outstanding at December 31, 2016		165,643		$	11.22		871,101		$	52.22

Issued		2,459,368			1.47		385,000			2.25
Expired		(12,730	)		10.39		(1,533	)		281.60
Exercised		-			-		-			-

Outstanding at September 30, 2017		2,612,281		$	2.05		1,254,568		$	36.60

*Range of Prices*		*Shares*		*Weighted Remaining Life*
Options
$	1.454		17,200		10.00
$	1.47		2,427,882		9.73
$	2.10		14,286		9.50
$	2.25		293		8.90
$	2.42		24,768		8.76
$	2.80		57,145		9.26
$	3.75		44,000		8.76
$	4.125		3,636		9.01
$	4.1975		7,147		8.97
$	4.25		3,529		8.50
$	5.125		3,902		8.94
$	65.75		190		7.86
$	73.50		1,157		8.26
$	77.50		2,323		7.75
$	80.25		187		8.01
$	86.25		232		7.50
$	131.25		81		4.94
$	148.125		928		5.47
$	150.00		1,760		4.88
$	162.50		123		7.26
$	206.25		121		7.01
$	248.4375		121		5.79
$	262.50		130		5.79
$	281.25		529		5.30
$	318.75		3		5.60
$	346.875		72		6.50
$	431.25		306		6.44
$	506.25		188		6.25
$	596.25		42		6.00

			2,612,281

Warrants
$	2.25		385,000		4.32
$	4.46		756,999		4.17
$	93.75		2,255		0.45
$	123.75		94,084		2.92
$	150.00		4,114		0.45
$	225.00		107		0.32
$	243.75		2,529		1.84
$	281.25		4,364		0.32
$	309.375		2,850		1.86
$	309.50		222		2.10
$	337.50		178		0.72
$	371.25		944		0.66
$	506.25		59		1.38
$	609.375		862		1.34
			1,254,568

Stock Options:
Year	Shares		Price
2011		173		$281.25
2012		1,841	131.25	–	150.00
2013		1,553	148.13	–	596.25
2014		835	162.50	–	431.25
2015		4,088	65.75	–	86.25
2016		144,423	2.25	–	5.13
2017		2,459,368	1.45	–	2.10
Total		2,612,281	$1.45	–	596.25

Warrants:
Year	Shares		Price
2012		1,259		$281.25
2013		10,703	93.75	-	371.25
2014		6,455	243.75	–	609.38
2015		94,152	0.00	–	243.75
2016		756,999		4.46
2017		385,000		2.25
Total		1,254,568	$0.00	–	609.38

Derivative liability balance at December 31, 2019	$	50,989
Derivative instrument recognized for A, B and Agent Warrants		2,669,995
Derivative instrument related to Promissory Note 2020		120,921
Gain recognized to revalue derivative instrument at fair value		(27,107	)
Derivative liability balance at March 30, 2020	$	2,814,798
Derivative instrument recognized for May 2020 Warrants		1,324,184
Derivative instrument recognized for June 2020 Warrants		1,749,721
Derivative instrument related to Promissory Note 2020		20,542
Reclassification of Warrant liabilities to Equity on exercise		(1,701,756	)
Loss recognized to revalue derivative instrument at fair value		422,081
Derivative liability balance at June 30, 2020	$	4,629,570
Gain recognized to revalue derivative instrument at fair value		(1,402,768	)
Reclassification of Warrant liabilities to Equity		(2,669,408	)
Derivative instrument related to September 30 debt amendments		495,100
Derivative liability balance at September 30, 2020	$	1,052,494

	September 30, 2017		December 31, 2016

Deferred Tax Asset:
Net Operating Loss	$	11,488,000	$	10,755,000
Other		515,000		189,000
Total Deferred Tax Asset		12,003,000		10,944,000
Less Valuation Allowance		12,003,000		10,944,000
Net Deferred Income Taxes	$	—	$	—

	Three Months Ended				Nine Months Ended,
	September 30,				September 30,
	2020		2019		2020		2019
Skyline	$	471,054	$	495,884	$	924,605	$	1,011,672
Helomics		9,703		26,812		33,879		52,416
Soluble		-		-		-		-
Corporate		-		-		-		-
Total	$	480,757	$	522,696	$	958,484	$	1,064,088

	As of September 30,		As of December 31,
	2020		2019
Skyline	$	1,292,073	$	969,793
Helomics		20,193,997		21,275,306
Soluble		1,789,598		-
Corporate		1,885,309		130,411
Total		25,160,978	$	22,375,510

	·	We may not be able to continue operating without additional financing;
	·	Current negative operating cash ~~flows, as well as the impact on our cash levels of advances to our strategic partners and possible future advances to such organizations or others;~~flows;

	·	Significant debt repayments due in less than one year, which the Company may need to extend or restructure, with no assurance that this will be possible;
	·	Risks related to recent and future acquisitions, including the possibility of further impairment of goodwill and risks related to the benefits and costs of acquisition;
	·	Risks related to our partnerships with other companies, including the need to negotiate the definitive agreements; possible failure to realize anticipated benefits of these partnerships; and costs of providing funding to our partner companies, which may never be repaid or provide anticipated returns;
	·	Risk ~~that we will be unable~~related to ~~protect~~the protection of our intellectual property or any future legal claims ~~that we are infringing on others’~~relating to intellectual property;

	·	The impact of ~~competition, the obtaining~~competition;
	·	Acquisition and maintenance of any necessary regulatory clearances applicable to applications of ~~the Company’s~~our technology;

	~~SKYLINE MEDICAL~~PREDICTIVE ONCOLOGY INC.

Date: November ~~14, 2017~~16, 2020	By:	/s/ Carl Schwartz
		Carl Schwartz
		Chief Executive Officer

Date: November ~~14, 2017~~16, 2020	By:	/s/ Bob Myers
		Bob Myers
		Chief Financial Officer

Exhibit ~~No.~~Number		Description


4.1*		Form of Warrant dated April 4, 2019 issued in Exchange Offer with Holders of Securities of Helomics Holding Corporation, as amended on September 14, 2020

4.2		Form of Amendment to Common Stock Purchase Warrant (1) Exhibit 4.2

10.1		Amendment #5 To The Amended And Restated Senior Secured Promissory Note Originally Issued on September 28, 2018, by and between the Company and L2 Capital, LLC (2) Exhibit 10.1

10.2		Amendment #3 To The Senior Secured Promissory Note Originally Issued On September 27, 2019, by and Between the Company and Oasis Capital, LLC (2) Exhibit 10.2

10.3		Amendment #2 to the Senior Secured Promissory Note originally issued on February 5, 2020 by and among the Company and Oasis Capital, LLC investors (2) Exhibit 10.3

31.1*		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document**
101.SCH*		XBRL Extension Schema Document**
101.CAL*		XBRL Extension Calculation Linkbase Document**
101.DEF*		XBRL Extension Definition Linkbase Document**
101.LAB*		XBRL Extension Labels Linkbase Document**
101.PRE*		XBRL Extension Presentation Linkbase Document**

†	~~Compensatory plan or arrangement.~~
*	~~Filed herewith.~~
**	~~In accordance with Rule 406T of Regulation S-T, this information is deemed not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.~~