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Black (05588)\nken.black@stoel.com\nMichael R. Menssen (15424)\nmichael.menssen@stoel.com\nSTOEL RIVES LLP\n201 S. Main Street, Suite 1100\nSalt Lake City, UT 84111\nTelephone: (801) 328-3131\n\nAttorneys for Defendants PolarityTE, Inc.,\nDenver Lough, Michael Beeghley, Willie C.\nBogan, Jeff Dyer, Steven Gorlin, Jon Mogford,\nJohn Stetson and Edward Swanson\n\n IN THE UNITED STATES DISTRICT COURT\n\n DISTRICT OF UTAH\n\nHENRY MONTHER, derivatively on behalf ORDER GRANTING STIPULATED\nof POLARITYTE, INC., MOTION FOR VOLUNTARY\n DISMISSAL OF ACTION PURSUANT\n Plaintiff, TO FEDERAL RULES OF CIVIL\n PROCEDURE 23.1 AND 41\n v.\n Case No. 2:18-cv-00791-TC\nDENVER LOUGH, MICHAEL\nBEEGHLEY, WILLIE C. BOGAN, JEFF Hon. Tena Campbell\nDYER, STEVEN GORLIN, JON\nMOGFORD, JOHN STETSON, and\nEDWARD SWANSON,\n\n Defendants,\n\n and\n\nPOLARITYTE, INC.,\n\n Nominal Defendant.\n\f Case 2:18-cv-00791-TC Document 15 Filed 01/28/21 PageID.94 Page 2 of 2\n\n\n\n\n Pursuant to the Stipulated Motion Regarding Voluntary Dismissal of Action Pursuant to\n\nFederal Rules of Civil Procedure 23.1(c) and 41(a) (the \u201cStipulated Motion\u201d) (ECF No. 14), and\n\ngood cause appearing:\n\n 1. This Action shall be dismissed on the terms provided for in the Stipulated Motion,\n\nwithout prejudice as to Plaintiff, Polarity, and/or any other Polarity stockholder.\n\n 2. Notice to Polarity stockholders of this dismissal beyond the public filing of this\n\nOrder is unnecessary because (i) the dismissal is without prejudice to the ability of any Polarity\n\nstockholder, or Polarity itself, to pursue the claims asserted in the Action; and (ii) there has been\n\nno settlement or compromise of the Action.\n\n 3. The Parties shall bear their own fees, costs, and expenses in connection with the\n\nAction.\n\n IT IS SO ORDERED.\n\n Dated: January 28, 2021\n The Honorable Tena Campbell\n United States District Court Judge\n\n\n\n\n 2\n\f","ocr_status":2,"date_upload":"2021-02-22T18:33:36.382842-08:00","document_number":"15","attachment_number":null,"pacer_doc_id":"18305232082","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order on Motion to Dismiss","acms_document_guid":""}],"date_created":"2021-01-28T16:19:57.661060-08:00","date_modified":"2021-04-20T01:25:24.024806-07:00","date_filed":"2021-01-28","time_filed":null,"entry_number":15,"recap_sequence_number":"2021-01-28.001","pacer_sequence_number":60,"description":"ORDER granting 14 Stipulated Motion to Voluntarily Dismiss this action without prejudice. Signed by Judge Tena Campbell on 1/28/21 (alt) (Entered: 01/28/2021)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/154078127/","id":154078127,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/159126424/","id":159126424,"tags":[],"absolute_url":"/docket/8219333/14/monther-v-lough/","date_created":"2021-01-27T14:21:18.742172-08:00","date_modified":"2021-04-20T01:25:24.017044-07:00","sha1":"418881de248788407fafb2ee909600efdba0bffb","page_count":3,"file_size":164976,"filepath_local":"recap/gov.uscourts.utd.112015/gov.uscourts.utd.112015.14.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.utd.112015/gov.uscourts.utd.112015.14.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 2:18-cv-00791-TC Document 14 Filed 01/27/21 PageID.87 Page 1 of 3\n\n\n\n\nKenneth B. Black (05588)\nken.black@stoel.com\nMichael R. Menssen (15424)\nmichael.menssen@stoel.com\nSTOEL RIVES LLP\n201 S. Main Street, Suite 1100\nSalt Lake City, UT 84111\nTelephone: (801) 328-3131\n\nAttorneys for Defendants PolarityTE, Inc.,\nDenver Lough, Michael Beeghley, Willie C.\nBogan, Jeff Dyer, Steven Gorlin, Jon Mogford,\nJohn Stetson and Edward Swanson\n\n IN THE UNITED STATES DISTRICT COURT\n\n DISTRICT OF UTAH\n\n HENRY MONTHER, derivatively on behalf STIPULATED MOTION FOR\n of POLARITYTE, INC., VOLUNTARY DISMISSAL OF ACTION\n PURSUANT TO FEDERAL RULES OF\n Plaintiff, CIVIL PROCEDURE 23.1 AND 41\n\n v.\n Case No. 2:18-cv-00791-TC\n DENVER LOUGH, MICHAEL\n BEEGHLEY, WILLIE C. BOGAN, JEFF Hon. Tena Campbell\n DYER, STEVEN GORLIN, JON\n MOGFORD, JOHN STETSON, and\n EDWARD SWANSON,\n\n Defendants,\n\n and\n\n POLARITYTE, INC.,\n\n Nominal Defendant.\n\f Case 2:18-cv-00791-TC Document 14 Filed 01/27/21 PageID.88 Page 2 of 3\n\n\n\n\n Plaintiff Henry Monther (\u201cPlaintiff\u201d), derivatively on behalf of PolarityTE, Inc. (\u201cPolarity\u201d\n\nor \u201cNominal Defendant\u201d), and defendants Denver Lough, Michael Beeghley, Willie C. Bogan,\n\nJeff Dyer, Steven Gorlin, Jon Mogford, John Stetson, and Edward Swanson (collectively, the\n\n\u201cIndividual Defendants,\u201d and together with Nominal Defendant, \u201cDefendants\u201d) have conferred,\n\nthrough their counsel, and agree that Plaintiff shall voluntarily dismiss the above-captioned\n\nconsolidated action (the \u201cAction\u201d) pursuant to Rules 23.1(c) and 41(a) of the Federal Rules of\n\nCivil Procedure, without prejudice as to Plaintiff, Nominal Defendant, and/or any other Polarity\n\nstockholder.\n\n WHEREAS, Plaintiff and Defendants (the \u201cParties\u201d) agree that the dismissal is not, and\n\nshall not be deemed to be, an adjudication of the Action on the merits, and that each Party shall\n\nbear its own fees, costs, and expenses incurred in connection with the Action; and\n\n WHEREAS, the Parties agree and respectfully submit that additional notice to Polarity\n\nstockholders of this dismissal beyond the public filing of the Order is unnecessary because: (i) the\n\ndismissal is without prejudice to the ability of any Polarity stockholder, or Polarity itself, to pursue\n\nthe claims asserted in the Action; and (ii) there has been no settlement or compromise of the\n\nAction.\n\n NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and among the\n\nParties, through their undersigned counsel of record and subject to approval of the Court, that:\n\n 1. This Action shall be dismissed on the terms provided for in this Stipulation and\n\n[Proposed] Order, without prejudice as to Plaintiff, Polarity, and/or any other Polarity stockholder.\n\n 2. Notice to Polarity stockholders of this dismissal is unnecessary because (i) the\n\ndismissal is without prejudice to the ability of any Polarity stockholder, or Polarity itself, to pursue\n\n\n\n 2\n\f Case 2:18-cv-00791-TC Document 14 Filed 01/27/21 PageID.89 Page 3 of 3\n\n\n\n\nthe claims asserted in the Action; and (ii) there has been no settlement or compromise of the\n\nAction.\n\n 3. The Parties shall bear their own fees, costs, and expenses in connection with the\n\nAction.\n\n A proposed order is attached hereto as Exhibit 1.\n\n IT IS SO STIPULATED.\n\nDated: January 27, 2021 STOEL RIVES LLP\n\n By /s/ Michael R. Menssen\n Kenneth B. Black\n Michael R. Menssen\n\n Attorneys for Defendants POLARITYTE, INC,\n DENVER LOUGH, MICHAEL BEEGHLEY,\n WILLIE C. BOGAN, JEFF DYER, STEVEN\n GORLIN, JON MOGFORD, JOHN STETSON,\n and EDWARD SWANSON\n\n\nDated: January 27, 2021 JAMES DODGE RUSSELL & STEPHENS, PC\n\n By /s/ Mark F. James (with permission)\n Mark F. James\n\n Attorneys for Plaintiff\n\n\n\n\n 3\n\f","ocr_status":2,"date_upload":"2021-02-22T18:32:46.414302-08:00","document_number":"14","attachment_number":null,"pacer_doc_id":"18305230273","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Dismiss","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/161434985/","id":161434985,"tags":[],"absolute_url":"/docket/8219333/14/1/monther-v-lough/","date_created":"2021-02-22T18:32:38.036085-08:00","date_modified":"2021-02-22T18:32:38.039176-08:00","sha1":"","page_count":3,"file_size":226304,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"14","attachment_number":1,"pacer_doc_id":"18305230274","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit 1 - Text of Proposed Order","acms_document_guid":""}],"date_created":"2021-01-27T14:21:18.733319-08:00","date_modified":"2021-04-20T01:25:24.007647-07:00","date_filed":"2021-01-27","time_filed":null,"entry_number":14,"recap_sequence_number":"2021-01-27.001","pacer_sequence_number":58,"description":"Stipulated MOTION to Dismiss [Stipulated Motion for Voluntary Dismissal of Action Pursuant to Federal Rules of Civil Procedure 23.1 and 41] filed by Defendants Michael Beeghley, Willie C. Bogan, Jeff Dyer, Steven Gorlin, Denver Lough, Jon Mogford, Polarityte, John Stetson, Edward Swanson. (Attachments: # 1 Exhibit 1 - Text of Proposed Order)(Menssen, Michael) (Entered: 01/27/2021)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/87119287/","id":87119287,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/91294665/","id":91294665,"tags":[],"absolute_url":"/docket/8219333/13/monther-v-lough/","date_created":"2019-06-17T16:01:40.668014-07:00","date_modified":"2021-04-20T01:25:23.999231-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"13","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2019-06-17T16:01:40.657718-07:00","date_modified":"2021-04-20T01:25:23.987433-07:00","date_filed":"2019-05-14","time_filed":null,"entry_number":13,"recap_sequence_number":"2019-05-14.001","pacer_sequence_number":null,"description":"DOCKET TEXT ORDER Administratively Closing this Case. Case may be reopened upon motion of pla(s) or dft(s). So ordered by Judge Tena Campbell on 5/14/19 (docket text only - no attached document) (alt) (Entered: 05/14/2019)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/87119286/","id":87119286,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/91294664/","id":91294664,"tags":[],"absolute_url":"/docket/8219333/12/monther-v-lough/","date_created":"2019-06-17T16:01:40.647645-07:00","date_modified":"2021-04-20T01:25:23.980391-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"12","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2019-06-17T16:01:40.637027-07:00","date_modified":"2021-04-20T01:25:23.968911-07:00","date_filed":"2019-05-13","time_filed":null,"entry_number":12,"recap_sequence_number":"2019-05-13.001","pacer_sequence_number":null,"description":"Minute Entry for proceedings held before Judge Tena Campbell: Status Conference held on 5/13/2019. Counsel are present and the court is updated as to the present status of this case. Counsel are awaiting a decision on a motion to dismiss which is pending in another action and based on that decision, they will decide how to proceed in this case. For this reason, the court is administratively closing this case at this time. It can be re-opened by either party by simply filing a motion. Attorney for Plaintiff: Mark James, Attorney for Defendant: Michael Menssen. Court Reporter: Kelly Hicken.(cff) (Entered: 05/14/2019)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/87119285/","id":87119285,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/91294663/","id":91294663,"tags":[],"absolute_url":"/docket/8219333/11/monther-v-lough/","date_created":"2019-06-17T16:01:40.626923-07:00","date_modified":"2021-04-20T01:25:23.963674-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"11","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2019-06-17T16:01:40.616675-07:00","date_modified":"2021-04-20T01:25:23.952458-07:00","date_filed":"2019-04-10","time_filed":null,"entry_number":11,"recap_sequence_number":"2019-04-10.001","pacer_sequence_number":null,"description":"AMENDED NOTICE OF HEARING: (Notice generated by chambers) Status Conference RESET for 5/13/2019 at 11:00 AM in Rm 3.400 before Judge Tena Campbell. ***PLEASE NOTE NEW DATE AND TIME*** (cff) (Entered: 04/10/2019)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/87119284/","id":87119284,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/91294662/","id":91294662,"tags":[],"absolute_url":"/docket/8219333/10/monther-v-lough/","date_created":"2019-06-17T16:01:40.605775-07:00","date_modified":"2021-04-20T01:25:23.944973-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"10","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2019-06-17T16:01:40.594605-07:00","date_modified":"2021-04-20T01:25:23.932082-07:00","date_filed":"2019-03-26","time_filed":null,"entry_number":10,"recap_sequence_number":"2019-03-26.001","pacer_sequence_number":null,"description":"NOTICE OF HEARING: (Notice generated by chambers) Status Conference set for 4/22/2019 at 10:00 AM in Rm 3.400 before Judge Tena Campbell. (cff) (Entered: 03/26/2019)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/78919984/","id":78919984,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/83063075/","id":83063075,"tags":[],"absolute_url":"","date_created":"2019-05-14T11:19:58.965194-07:00","date_modified":"2019-05-14T11:19:58.968863-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order to Administratively Close Case","acms_document_guid":""}],"date_created":"2019-05-14T11:19:58.958607-07:00","date_modified":"2019-05-14T11:19:58.958641-07:00","date_filed":"2019-05-14","time_filed":null,"entry_number":null,"recap_sequence_number":"2019-05-14.001","pacer_sequence_number":null,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/53343770/","id":53343770,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/57375641/","id":57375641,"tags":[],"absolute_url":"/docket/8219333/8/monther-v-lough/","date_created":"2019-01-14T11:12:58.176351-08:00","date_modified":"2021-04-20T01:25:23.899507-07:00","sha1":"eaee8f14165d2c9839b548b3f70280e705fb4cd0","page_count":2,"file_size":21873,"filepath_local":"recap/gov.uscourts.utd.112015/gov.uscourts.utd.112015.8.0_1_1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.utd.112015/gov.uscourts.utd.112015.8.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 2:18-cv-00791-TC Document 8 Filed 11/20/18 Page 1 of 2\n\n\n\n\nKenneth B. Black (05588)\nken.black@stoel.com\nMichael R. Menssen (15424)\nmichael.menssen@stoel.com\nSTOEL RIVES LLP\n201 S. Main Street, Suite 1100\nSalt Lake City, UT 84111\nTelephone: (801) 328-3131\n\nAttorneys for Defendants PolarityTE, Inc.,\nDenver Lough, Michael Beeghley, Willie C.\nBogan, Jeff Dyer, Steven Gorlin, Jon Mogford,\nJohn Stetson and Edward Swanson\n\n IN THE UNITED STATES DISTRICT COURT\n\n DISTRICT OF UTAH\n\nHENRY MONTHER, derivatively on behalf of NOTICE OF APPEARANCE OF\nPOLARITYTE, INC., MICHAEL R. MENSSEN\n\n Plaintiff, Case No. 2:18-cv-00791-TC\n\n v. The Honorable Tena Campbell\n\nDENVER LOUGH, MICHAEL BEEGHLEY,\nWILLIE C. BOGAN, JEFF DYER, STEVEN\nGORLIN, JON MOGFORD, JOHN\nSTETSON, and EDWARD SWANSON,\n\n Defendants,\n\n and\n\nPOLARITYTE, INC.,\n\n Nominal Defendant.\n\n\n\n\n99287565.1 0068409-00001\n\f Case 2:18-cv-00791-TC Document 8 Filed 11/20/18 Page 2 of 2\n\n\n\n\n NOTICE IS HEREBY GIVEN that Michael R. Menssen of Stoel Rives LLP hereby\n\nappears as counsel for Defendants Denver Lough, Michael Beeghley, Willie C. Bogan,\n\nJeff Dyer, Steven Gorlin, Jon Mogford, John Stetson, Edward Swanson and PolarityTE, Inc. in\n\nthe above-captioned action and requests that all further notices, inquiries, and copies of\n\npleadings, papers and other material relevant to this action be directed and served upon the\n\nfollowing:\n\n Michael R. Menssen (#15424)\n Email: michael.menssen@stoel.com\n STOEL RIVES LLP\n 201 S. Main Street, Suite 1100\n Salt Lake City, UT 84111-4904\n Telephone: (801) 328-3131\n Facsimile: (801) 578-6999\n\n\n DATED: November 20, 2018 STOEL RIVES LLP\n\n\n By: /s/ Michael R. Menssen\n Kenneth B. Black\n Michael R. Menssen\n\n Attorneys for Defendants PolarityTE, Inc., Denver\n Lough, Michael Beeghley, Willie C. Gogan, Jeff\n Dyer, Steven Gorlin, Jon Mogford, John Stetson\n and Edward Swanson\n\n\n\n\n99287565.1 0068409-00001 2\n\f","ocr_status":2,"date_upload":null,"document_number":"8","attachment_number":null,"pacer_doc_id":"18304484721","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Notice of Appearance","acms_document_guid":""}],"date_created":"2019-01-14T11:12:58.162125-08:00","date_modified":"2021-04-20T01:25:23.886346-07:00","date_filed":"2018-11-20","time_filed":null,"entry_number":8,"recap_sequence_number":"2018-11-20.003","pacer_sequence_number":37,"description":"NOTICE of Appearance by Michael Richard Menssen on behalf of Michael Beeghley, Willie C. Bogan, Jeff Dyer, Steven Gorlin, Denver Lough, Jon Mogford, Polarityte, John Stetson, Edward Swanson (Menssen, Michael) (Entered: 11/20/2018)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/53343769/","id":53343769,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/57375640/","id":57375640,"tags":[],"absolute_url":"/docket/8219333/7/monther-v-lough/","date_created":"2019-01-14T11:12:58.147083-08:00","date_modified":"2021-04-20T01:25:23.879214-07:00","sha1":"97dcc02ec55f6a5520ad49d7d4c213452f5d4773","page_count":2,"file_size":21785,"filepath_local":"recap/gov.uscourts.utd.112015/gov.uscourts.utd.112015.7.0_1_1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.utd.112015/gov.uscourts.utd.112015.7.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 2:18-cv-00791-TC Document 7 Filed 11/20/18 Page 1 of 2\n\n\n\n\nKenneth B. Black (05588)\nken.black@stoel.com\nMichael R. Menssen (15424)\nmichael.menssen@stoel.com\nSTOEL RIVES LLP\n201 S. Main Street, Suite 1100\nSalt Lake City, UT 84111\nTelephone: (801) 328-3131\n\nAttorneys for Defendants PolarityTE, Inc.,\nDenver Lough, Michael Beeghley, Willie C.\nBogan, Jeff Dyer, Steven Gorlin, Jon Mogford,\nJohn Stetson and Edward Swanson\n\n IN THE UNITED STATES DISTRICT COURT\n\n DISTRICT OF UTAH\n\nHENRY MONTHER, derivatively on behalf of POLARITYTE, INC.\u2019S RULE 7.1\nPOLARITYTE, INC., CORPORATE DISCLOSURE\n STATEMENT\n Plaintiff,\n Case No. 2:18-cv-00791-TC\n v.\n The Honorable Tena Campbell\nDENVER LOUGH, MICHAEL BEEGHLEY,\nWILLIE C. BOGAN, JEFF DYER, STEVEN\nGORLIN, JON MOGFORD, JOHN\nSTETSON, and EDWARD SWANSON,\n\n Defendants,\n\n and\n\nPOLARITYTE, INC.,\n\n Nominal Defendant.\n\n\n\n\n99286613.1 0068409-00001\n\f Case 2:18-cv-00791-TC Document 7 Filed 11/20/18 Page 2 of 2\n\n\n\n\n Pursuant to Federal Rule of Civil Procedure 7.1, Nominal Defendant PolarityTE, Inc.\n\n(\u201cPolarityTE\u201d), by and through undersigned counsel, hereby discloses the following: PolarityTE\n\nis a publicly held corporation whose shares are traded on NASDAQ. It has no parent company\n\nand no publicly held corporation owns more than 10% or more of PolarityTE\u2019s shares.\n\n DATED: November 20, 2018 STOEL RIVES LLP\n\n /s/ Kenneth B. Black\n Kenneth B. Black\n Michael R. Menssen\n\n Attorneys for Defendants PolarityTE, Inc.,\n Denver Lough, Michael Beeghley, Willie C.\n Gogan, Jeff Dyer, Steven Gorlin, Jon Mogford,\n John Stetson and Edward Swanson\n\n\n\n\n99286613.1 0068409-00001 2\n\f","ocr_status":2,"date_upload":null,"document_number":"7","attachment_number":null,"pacer_doc_id":"18304484718","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Rule 7 Corporate Disclosure Statement","acms_document_guid":""}],"date_created":"2019-01-14T11:12:58.132988-08:00","date_modified":"2021-04-20T01:25:23.861954-07:00","date_filed":"2018-11-20","time_filed":null,"entry_number":7,"recap_sequence_number":"2018-11-20.002","pacer_sequence_number":35,"description":"CORPORATE DISCLOSURE STATEMENT under FRCP 7.1 filed by Defendant Polarityte. (Black, Kenneth) (Entered: 11/20/2018)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/53343768/","id":53343768,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/57375639/","id":57375639,"tags":[],"absolute_url":"/docket/8219333/5/monther-v-lough/","date_created":"2019-01-14T11:12:58.098511-08:00","date_modified":"2021-04-20T01:25:23.829682-07:00","sha1":"3b49afe548c32298c45791a92e304f3c1bf3e7a3","page_count":7,"file_size":184234,"filepath_local":"recap/gov.uscourts.utd.112015/gov.uscourts.utd.112015.5.0_2.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.utd.112015/gov.uscourts.utd.112015.5.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 2:18-cv-00791-TC Document 5 Filed 10/10/18 Page 1 of 7\n\n\n\n United States District Court\n District of Utah\nD. Mark Jones Anne S. Morgan\nClerk of Court Chief Deputy Clerk\n\n\n\n October 10, 2018\n\n\n\nTimothy W. Brown\nTHE BROWN LAW FIRM, P.C.\n240 Townsend Square\nOyster Bay, NY 11771\n__\n\nRe: Monther v. Lough, et al\n 2:18-cv-00791-TC\n Counsel for: Plaintiff\n\nDear Counsel:\n\n Our records indicate that you are not a member of the bar of this court. You must\nbecome an active member of the bar of this court or be admitted pro hac vice in order to appear\nin this court, in the above-entitled case.\n\n Enclosed you will find the application form which is required under our local rules of\npractice. You must associate local counsel to submit a motion for pro hac vice admission, your\napplication, the fee and a proposed order. You will not be added to the case to receive notice\nuntil the order of the court has been signed and docketed. Please make copies of the application\nand submit one for each attorney to be admitted. An electronic filing registration form is attached\nfor submission to the court.\n\n You may contact the attorney registration clerk at 801-524-6100 with any questions\nwhich you may have.\n\n\nSincerely,\nD. Mark Jones, Clerk\n\n\nBy:\nNancy Lealaisalanoa\nIntake Clerk\n\nEnclosure\n\n 351 S West Temple\u2022Salt Lake City, Utah 84101\u2022(801)524-6100\u2022www.utd.uscourts.gov\n\f Case 2:18-cv-00791-TC Document 5 Filed 10/10/18 Page 2 of 7\n\n\n\n United States District Court\n District of Utah\nD. Mark Jones Anne S. Morgan\nClerk of Court Chief Deputy Clerk\n\n\n\n\n 351 S West Temple\u2022Salt Lake City, Utah 84101\u2022(801)524-6100\u2022www.utd.uscourts.gov\n\f Case 2:18-cv-00791-TC Document 5 Filed 10/10/18 Page 3 of 7\n\n\n\n\n Admission Pro Hac Vice\n Instructions and Forms\n Attorneys who are not members of this Court\u2019s Bar may practice before this Court only after having\nbeen admitted pro hac vice pursuant to DU.Civ. Rule 83-1.1 (d). Non-resident attorneys who wish to be\nadmitted must associate local counsel to sponsor their temporary admission. Local counsel shall move the\nadmission of the pro hac counsel, and substitute in court if required. Local Counsel must file the following\nwith the court:\n\n 1. Motion by local counsel for admission of the pro hac vice attorney\n This should be filed electronically and the $250.00 fee paid on Pay.gov\n\n 2. Attached to the motion as an exhibit is the completed application for admission pro hac\n vice completed by the attorney seeking admission\n\n 3. Also attached as an exhibit should be a proposed order admitting the attorney.\n\n Local counsel shall encourage pro hac vice attorneys to submit their electronic filing registration form\nas an exhibit to the application, noting that, if the pro hac vice attorney is a registered electronic filer in any\nother federal court, he or she will be given a Utah login and password upon order granting the application.\n\n The forms and fees must be paid for each case to which the attorney seeks admission. Attorneys for\nthe United States from other districts are exempt from the payment of the $250.00 fee but must comply with\nthe other requirements of the rule.\n\nHOURS: The Clerk\u2019s Office business hours are 8:30 a.m. to 4:30 p.m., Mountain Standard/Mountain\n Daylight Time.\n\nPHONE: Call the Clerk\u2019s Office at 801-524-6100\n\nWEBSITE: Visit the court\u2019s web page at http://www.utd.uscourts.gov for basic information on the court,\n local rules, and forms.\n\nFILINGS: The Court does not accept faxed filings. Affidavits submitted as separate original filings must\n bear an original signature.\n\nE-FILING: The Court mandated e-filing for all cases on May 1, 2006.\n The court will e-mail rather than mail orders, judgments and notices.\n\nCOPIES: Orders for copies of case documents must be prepaid. The Clerk\u2019s Office accepts MasterCard,\n Visa, Discover and American Express.\n\nDOCKETS: Case dockets are accessible through PACER at http://ecf.utd.uscourts.gov. Charges are based\n on the number of pages accessed at $.10 per page. You may register online at\n http://pacer.psc.uscourts.gov or call the PACER Service Center at 800-676-6856.\n\f Case 2:18-cv-00791-TC Document 5 Filed 10/10/18 Page 4 of 7\n\n\n\n\nCounsel Submitting and Utah State Bar Number\nAttorney For\nAddress\nTelephone\n\n UNITED STATES DISTRICT COURT\n District of Utah\n\n___________________________________________________________________________\n *\n________________________________________ * Motion for Pro Hac Vice Admission and\n Plaintiff * Consent of Local Counsel\n *\n v. *\n *\n_________________________________________ * Case No.\n Defendant. *\n________________________________________________________________________________________\n\n\n\n Pursuant to D.U. Civ Rule 83-1.1(d), I move the admission of ___________________ as pro hac vice\n\ncounsel for ____________________ ( Plaintiff/Defendant) and consent to serve as local counsel. The\n\napplication for pro hac vice admission is attached as exhibit A to this motion, an Electronic Case Filing\n\nRegistration Form as exhibit B, and the admission fee, if required, has been paid to the court with the\n\nsubmission of this motion.\n\n\n\n\nDated\n ________________________________\n Signature of local counsel\n\f Case 2:18-cv-00791-TC Document 5 Filed 10/10/18 Page 5 of 7\n\n\n UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH\n APPLICATION FOR ADMISSION PRO HAC VICE\n\nName of Attorney: ____________________________ Telephone:_______________\nFirm Name: ____________________________\nBusiness Address: ____________________________\n ____________________________\n ____________________________\n\n\nCurrent bar memberships and date of admission:\n Jurisdiction Bar Number\n _____________________ ______________________ Admitted on______________\n _____________________ ______________________ Admitted on______________\n _____________________ ______________________ Admitted on______________\n _____________________ ______________________ Admitted on______________\n\n Have you ever been the subject of disciplinary action by any bar to which you have been\n admitted?\n ____ No ____Yes ( provide additional information)\n\n Prior pro hac vice admissions in the District of Utah: ______ none\n\n Case Name:_______________________________________________________________\n Case Number:____________________\n Admission Date:__________________\n\n (Attach list of other cases separately if more space is needed.)\n\n I certify that I am a member in good standing of all bars to which I have been admitted. I further\nagree to read and comply with the Utah Rules of Professional Conduct and the Utah Standards of\nProfessionalism and Civility. This certification that the foregoing is true and correct is made under\npenalty of perjury.\n\n\n\n __________________________ _____________________\n Signature Date\n\n\nNon resident United States attorneys and attorneys employed by agencies of the federal government are\nexempt from the pro hac vice fee. All other attorneys must pay a fee of $250.00 concurrent with this\napplication. This application must be filed as an attachment to a motion for admission and consent filed\nby local counsel.\n\n If you have not previously registered for CM/ECF in the District of Utah, please attach a\ncompleted Electronic Case Registration Form with this application to receive your login and password.\n\f Case 2:18-cv-00791-TC Document 5 Filed 10/10/18 Page 6 of 7\n\n\n\n UNITED STATES DISTRICT COURT\n DISTRICT OF UTAH\n___________________________________________________________________________________\n :\n___________________________, :\n Plaintiff :\n : ORDER FOR PRO HAC VICE ADMISSION\n v. :\n :\n___________________________, :\n Defendant : Case Number\n\n_____________________________________________________________________________\n\n\n\n It appearing to the Court that Petitioner meets the pro hac vice admission requirements of DUCiv\n\nR 83-1.1(d), the motion for the admission pro hac vice of ___________________ in the United States\n\nDistrict Court, District of Utah in the subject case is GRANTED.\n\n\n\n\nDated: this________day of ____________, 20______.\n\n\n _________________________________\n U.S. District Judge\n\f Case 2:18-cv-00791-TC Document 5 Filed 10/10/18 Page 7 of 7\n UNITED STATES DISTRICT COURT\n DISTRICT OF UTAH\n ELECTRONIC CASE FILING REGISTRATION FORM\nAttorneys who are active or current pro hac vice members of the District of Utah\u2019s Bar may register for the\nDistrict of Utah E-Filing System by (i) completing the required training and (ii) signing and returning this form to\nthe Court. Please review carefully the registration conditions set forth below before signing.\n________________________________________________________ _____________________________________________________________________\nName - First Middle Last\n Firm Name\n\n________________________________________________________ _____________________________________________________________________\n Mailing Address\n City, State, Zip\n\n_____________________________________________ _____________________________________________________\n Utah State Bar # (if applicable)\n Telephone Number\n\nBy signing this form, I understand and consent to the following:\n -Pursuant to Fed. R. Civ. P. 5(b)(2)(E), I will receive all items required to be served under Fed.R.Civ.P. 5(a) and 77 (d) and\n Fed. R. Crim P. 49 by either (i) notice of electronic filing, or (ii) e-mail transmission;\n -Such electronic service will constitute service and notice of entry as required by those rules;\n -I waive my right to service by USPS mail;\n -I will abide by all Court rules, orders, and procedures governing the use of the electronic filing system;\n -The combination of user ID and password issued by this Court will serve as the equivalent of my signature when I e-file\n documents with the Court;\n -I will carefully examine all documents prior to e-filing them to either (i) redact sensitive and private information pursuant to\n DUCiv R , or (ii) move that the filing be sealed; and\n -I will secure and protect my Court-issued password against unauthorized use or compromise.\nEmail Address(es):\nPrimary E-mail address ______________________________________________________________\nUp to two additional e-mail addresses 1)_______________________________________________________ ,\n2) __________________________________________________________________________\nTo receive a login, please complete one of these four options. Please check appropriate box.\n\n \u2610 I have completed the CMECF Online Computer-Based Training modules on the court website at\n http://www.utd.uscourts.gov/online-computer-based-training-cmecf\n\n \u2610 I have completed the CMECF Training for Attorneys given by an in-house trainer in my firm.\n\n \u2610 I have an ECF account in the Utah Bankruptcy Court or in another Federal District or Bankruptcy Court.\n\n \u2610 I have attended CMECF Training given by the Court.\n\nDate: _________________________ Signature:____________________________________\nPlease complete this form, and submit it by one of the following methods:\n1. Mail the form to: United States District Court, Office of the Clerk, ATTN: CM/ECF Registration, 351 S. West\nTemple, Salt Lake City, Utah 84101, or\n2. Scan and email to ut_support@utd.uscourts.gov, or\n3. Include this form as a pdf attachment with your Application for Pro Hac Vice.\nAfter this Court processes this form, you will receive by email your user ID and password that will enable you to\naccess the system. The User Guide and administrative procedures for system use may be downloaded at:\nhttp://www.utd.uscourts.gov/cmecf-electronic-case-filing. Please call the Clerk\u2019s Office Help Desk at (801) 524-\n6851 if you have questions concerning registration, training, or use of the electronic filing system.\n Rev. 6/14/17\n\f","ocr_status":2,"date_upload":null,"document_number":"5","attachment_number":null,"pacer_doc_id":"18304445050","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Notice PHV Requirements","acms_document_guid":""}],"date_created":"2019-01-14T11:12:58.085559-08:00","date_modified":"2021-04-20T01:25:23.814994-07:00","date_filed":"2018-10-10","time_filed":null,"entry_number":5,"recap_sequence_number":"2018-10-10.004","pacer_sequence_number":22,"description":"NOTICE OF REQUIREMENTS for appearance phv mailed to attorney Timothy W. Brown, for Plaintiff Henry Monther. (nl) (Entered: 10/10/2018)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/53343767/","id":53343767,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/57375638/","id":57375638,"tags":[],"absolute_url":"/docket/8219333/4/monther-v-lough/","date_created":"2019-01-14T11:12:58.071038-08:00","date_modified":"2021-04-20T01:25:23.806228-07:00","sha1":"5002f23f59cecbbf20c658b94fcfa72db869c538","page_count":7,"file_size":184018,"filepath_local":"recap/gov.uscourts.utd.112015/gov.uscourts.utd.112015.4.0_2.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.utd.112015/gov.uscourts.utd.112015.4.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 2:18-cv-00791-TC Document 4 Filed 10/10/18 Page 1 of 7\n\n\n\n United States District Court\n District of Utah\nD. Mark Jones Anne S. Morgan\nClerk of Court Chief Deputy Clerk\n\n\n\n October 10, 2018\n\n\n\nPhillip Kim\nTHE ROSEN LAW FIRM, P.A.\n275 Madison Avenue, 34th Floor\nNew York, NY 10016\n__\n\nRe: Monther v. Lough, et al\n 2:18-cv-00791-TC\n Counsel for: Plaintiff\n\nDear Counsel:\n\n Our records indicate that you are not a member of the bar of this court. You must\nbecome an active member of the bar of this court or be admitted pro hac vice in order to appear\nin this court, in the above-entitled case.\n\n Enclosed you will find the application form which is required under our local rules of\npractice. You must associate local counsel to submit a motion for pro hac vice admission, your\napplication, the fee and a proposed order. You will not be added to the case to receive notice\nuntil the order of the court has been signed and docketed. Please make copies of the application\nand submit one for each attorney to be admitted. An electronic filing registration form is attached\nfor submission to the court.\n\n You may contact the attorney registration clerk at 801-524-6100 with any questions\nwhich you may have.\n\n\nSincerely,\nD. Mark Jones, Clerk\n\n\nBy:\nNancy Lealaisalanoa\nIntake Clerk\n\nEnclosure\n\n 351 S West Temple\u2022Salt Lake City, Utah 84101\u2022(801)524-6100\u2022www.utd.uscourts.gov\n\f Case 2:18-cv-00791-TC Document 4 Filed 10/10/18 Page 2 of 7\n\n\n\n United States District Court\n District of Utah\nD. Mark Jones Anne S. Morgan\nClerk of Court Chief Deputy Clerk\n\n\n\n\n 351 S West Temple\u2022Salt Lake City, Utah 84101\u2022(801)524-6100\u2022www.utd.uscourts.gov\n\f Case 2:18-cv-00791-TC Document 4 Filed 10/10/18 Page 3 of 7\n\n\n\n\n Admission Pro Hac Vice\n Instructions and Forms\n Attorneys who are not members of this Court\u2019s Bar may practice before this Court only after having\nbeen admitted pro hac vice pursuant to DU.Civ. Rule 83-1.1 (d). Non-resident attorneys who wish to be\nadmitted must associate local counsel to sponsor their temporary admission. Local counsel shall move the\nadmission of the pro hac counsel, and substitute in court if required. Local Counsel must file the following\nwith the court:\n\n 1. Motion by local counsel for admission of the pro hac vice attorney\n This should be filed electronically and the $250.00 fee paid on Pay.gov\n\n 2. Attached to the motion as an exhibit is the completed application for admission pro hac\n vice completed by the attorney seeking admission\n\n 3. Also attached as an exhibit should be a proposed order admitting the attorney.\n\n Local counsel shall encourage pro hac vice attorneys to submit their electronic filing registration form\nas an exhibit to the application, noting that, if the pro hac vice attorney is a registered electronic filer in any\nother federal court, he or she will be given a Utah login and password upon order granting the application.\n\n The forms and fees must be paid for each case to which the attorney seeks admission. Attorneys for\nthe United States from other districts are exempt from the payment of the $250.00 fee but must comply with\nthe other requirements of the rule.\n\nHOURS: The Clerk\u2019s Office business hours are 8:30 a.m. to 4:30 p.m., Mountain Standard/Mountain\n Daylight Time.\n\nPHONE: Call the Clerk\u2019s Office at 801-524-6100\n\nWEBSITE: Visit the court\u2019s web page at http://www.utd.uscourts.gov for basic information on the court,\n local rules, and forms.\n\nFILINGS: The Court does not accept faxed filings. Affidavits submitted as separate original filings must\n bear an original signature.\n\nE-FILING: The Court mandated e-filing for all cases on May 1, 2006.\n The court will e-mail rather than mail orders, judgments and notices.\n\nCOPIES: Orders for copies of case documents must be prepaid. The Clerk\u2019s Office accepts MasterCard,\n Visa, Discover and American Express.\n\nDOCKETS: Case dockets are accessible through PACER at http://ecf.utd.uscourts.gov. Charges are based\n on the number of pages accessed at $.10 per page. You may register online at\n http://pacer.psc.uscourts.gov or call the PACER Service Center at 800-676-6856.\n\f Case 2:18-cv-00791-TC Document 4 Filed 10/10/18 Page 4 of 7\n\n\n\n\nCounsel Submitting and Utah State Bar Number\nAttorney For\nAddress\nTelephone\n\n UNITED STATES DISTRICT COURT\n District of Utah\n\n___________________________________________________________________________\n *\n________________________________________ * Motion for Pro Hac Vice Admission and\n Plaintiff * Consent of Local Counsel\n *\n v. *\n *\n_________________________________________ * Case No.\n Defendant. *\n________________________________________________________________________________________\n\n\n\n Pursuant to D.U. Civ Rule 83-1.1(d), I move the admission of ___________________ as pro hac vice\n\ncounsel for ____________________ ( Plaintiff/Defendant) and consent to serve as local counsel. The\n\napplication for pro hac vice admission is attached as exhibit A to this motion, an Electronic Case Filing\n\nRegistration Form as exhibit B, and the admission fee, if required, has been paid to the court with the\n\nsubmission of this motion.\n\n\n\n\nDated\n ________________________________\n Signature of local counsel\n\f Case 2:18-cv-00791-TC Document 4 Filed 10/10/18 Page 5 of 7\n\n\n UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH\n APPLICATION FOR ADMISSION PRO HAC VICE\n\nName of Attorney: ____________________________ Telephone:_______________\nFirm Name: ____________________________\nBusiness Address: ____________________________\n ____________________________\n ____________________________\n\n\nCurrent bar memberships and date of admission:\n Jurisdiction Bar Number\n _____________________ ______________________ Admitted on______________\n _____________________ ______________________ Admitted on______________\n _____________________ ______________________ Admitted on______________\n _____________________ ______________________ Admitted on______________\n\n Have you ever been the subject of disciplinary action by any bar to which you have been\n admitted?\n ____ No ____Yes ( provide additional information)\n\n Prior pro hac vice admissions in the District of Utah: ______ none\n\n Case Name:_______________________________________________________________\n Case Number:____________________\n Admission Date:__________________\n\n (Attach list of other cases separately if more space is needed.)\n\n I certify that I am a member in good standing of all bars to which I have been admitted. I further\nagree to read and comply with the Utah Rules of Professional Conduct and the Utah Standards of\nProfessionalism and Civility. This certification that the foregoing is true and correct is made under\npenalty of perjury.\n\n\n\n __________________________ _____________________\n Signature Date\n\n\nNon resident United States attorneys and attorneys employed by agencies of the federal government are\nexempt from the pro hac vice fee. All other attorneys must pay a fee of $250.00 concurrent with this\napplication. This application must be filed as an attachment to a motion for admission and consent filed\nby local counsel.\n\n If you have not previously registered for CM/ECF in the District of Utah, please attach a\ncompleted Electronic Case Registration Form with this application to receive your login and password.\n\f Case 2:18-cv-00791-TC Document 4 Filed 10/10/18 Page 6 of 7\n\n\n\n UNITED STATES DISTRICT COURT\n DISTRICT OF UTAH\n___________________________________________________________________________________\n :\n___________________________, :\n Plaintiff :\n : ORDER FOR PRO HAC VICE ADMISSION\n v. :\n :\n___________________________, :\n Defendant : Case Number\n\n_____________________________________________________________________________\n\n\n\n It appearing to the Court that Petitioner meets the pro hac vice admission requirements of DUCiv\n\nR 83-1.1(d), the motion for the admission pro hac vice of ___________________ in the United States\n\nDistrict Court, District of Utah in the subject case is GRANTED.\n\n\n\n\nDated: this________day of ____________, 20______.\n\n\n _________________________________\n U.S. District Judge\n\f Case 2:18-cv-00791-TC Document 4 Filed 10/10/18 Page 7 of 7\n UNITED STATES DISTRICT COURT\n DISTRICT OF UTAH\n ELECTRONIC CASE FILING REGISTRATION FORM\nAttorneys who are active or current pro hac vice members of the District of Utah\u2019s Bar may register for the\nDistrict of Utah E-Filing System by (i) completing the required training and (ii) signing and returning this form to\nthe Court. Please review carefully the registration conditions set forth below before signing.\n________________________________________________________ _____________________________________________________________________\nName - First Middle Last\n Firm Name\n\n________________________________________________________ _____________________________________________________________________\n Mailing Address\n City, State, Zip\n\n_____________________________________________ _____________________________________________________\n Utah State Bar # (if applicable)\n Telephone Number\n\nBy signing this form, I understand and consent to the following:\n -Pursuant to Fed. R. Civ. P. 5(b)(2)(E), I will receive all items required to be served under Fed.R.Civ.P. 5(a) and 77 (d) and\n Fed. R. Crim P. 49 by either (i) notice of electronic filing, or (ii) e-mail transmission;\n -Such electronic service will constitute service and notice of entry as required by those rules;\n -I waive my right to service by USPS mail;\n -I will abide by all Court rules, orders, and procedures governing the use of the electronic filing system;\n -The combination of user ID and password issued by this Court will serve as the equivalent of my signature when I e-file\n documents with the Court;\n -I will carefully examine all documents prior to e-filing them to either (i) redact sensitive and private information pursuant to\n DUCiv R , or (ii) move that the filing be sealed; and\n -I will secure and protect my Court-issued password against unauthorized use or compromise.\nEmail Address(es):\nPrimary E-mail address ______________________________________________________________\nUp to two additional e-mail addresses 1)_______________________________________________________ ,\n2) __________________________________________________________________________\nTo receive a login, please complete one of these four options. Please check appropriate box.\n\n \u2610 I have completed the CMECF Online Computer-Based Training modules on the court website at\n http://www.utd.uscourts.gov/online-computer-based-training-cmecf\n\n \u2610 I have completed the CMECF Training for Attorneys given by an in-house trainer in my firm.\n\n \u2610 I have an ECF account in the Utah Bankruptcy Court or in another Federal District or Bankruptcy Court.\n\n \u2610 I have attended CMECF Training given by the Court.\n\nDate: _________________________ Signature:____________________________________\nPlease complete this form, and submit it by one of the following methods:\n1. Mail the form to: United States District Court, Office of the Clerk, ATTN: CM/ECF Registration, 351 S. West\nTemple, Salt Lake City, Utah 84101, or\n2. Scan and email to ut_support@utd.uscourts.gov, or\n3. Include this form as a pdf attachment with your Application for Pro Hac Vice.\nAfter this Court processes this form, you will receive by email your user ID and password that will enable you to\naccess the system. The User Guide and administrative procedures for system use may be downloaded at:\nhttp://www.utd.uscourts.gov/cmecf-electronic-case-filing. Please call the Clerk\u2019s Office Help Desk at (801) 524-\n6851 if you have questions concerning registration, training, or use of the electronic filing system.\n Rev. 6/14/17\n\f","ocr_status":2,"date_upload":null,"document_number":"4","attachment_number":null,"pacer_doc_id":"18304445041","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Notice PHV Requirements","acms_document_guid":""}],"date_created":"2019-01-14T11:12:58.054752-08:00","date_modified":"2021-04-20T01:25:23.793067-07:00","date_filed":"2018-10-10","time_filed":null,"entry_number":4,"recap_sequence_number":"2018-10-10.003","pacer_sequence_number":20,"description":"NOTICE OF REQUIREMENTS for appearance phv mailed to attorney Phillip Kim, for Plaintiff Henry Monther. (nl) (Entered: 10/10/2018)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/53343766/","id":53343766,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/57375637/","id":57375637,"tags":[],"absolute_url":"/docket/8219333/3/monther-v-lough/","date_created":"2019-01-14T11:12:58.040911-08:00","date_modified":"2021-04-20T01:25:23.787990-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"3","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Modification of Docket","acms_document_guid":""}],"date_created":"2019-01-14T11:12:58.029066-08:00","date_modified":"2021-04-20T01:25:23.772536-07:00","date_filed":"2018-10-10","time_filed":null,"entry_number":3,"recap_sequence_number":"2018-10-10.002","pacer_sequence_number":null,"description":"Modification of Docket: Error: Counsel submitted a new complaint to the Court by email on 10/09/2018, but did not e-file the complaint or pay the e-filing until 10/10/2018. Correction: The filing date has been changed to 10/10/2018 to reflect the date the fee was actually paid and the complaint and coversheet filed re 2 Complaint. (nl) (Entered: 10/10/2018)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/53343765/","id":53343765,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/57375636/","id":57375636,"tags":[],"absolute_url":"/docket/8219333/2/monther-v-lough/","date_created":"2019-01-14T11:12:58.014248-08:00","date_modified":"2021-04-20T01:25:23.745507-07:00","sha1":"beec3668f88179d40f47811ae191cc1cac392cc2","page_count":56,"file_size":710127,"filepath_local":"recap/gov.uscourts.utd.112015/gov.uscourts.utd.112015.2.0.pdf","filepath_ia":"","ia_upload_failure_count":3,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 1 of 56\n\n\n\n\nMark F. James (5295) THE ROSEN LAW FIRM, P.A.\nHATCH, JAMES & DODGE, P.C. Phillip Kim (pro hac vice forthcoming)\n10 West Broadway, Suite 400 275 Madison Avenue, 34th Floor\nSalt Lake City, UT 84101 New York, NY 10016\nTelephone: (801) 363-6363 Telephone: (212) 686-1060\nFacsimile: (801) 363-6666 Facsimile: (212) 202-3827\nEmail: mjames@hjdlaw.com Email: pkim@rosenlegal.com\n\nTHE BROWN LAW FIRM, P.C.\nTimothy W. Brown (pro hac vice application forthcoming)\n240 Townsend Square\nOyster Bay, NY 11771\nTelephone: (516) 922-5427\nFacsimile: (516) 344-6204\nEmail: tbrown@thebrownlawfirm.net\n\nCounsel for Plaintiff\n\n\n UNITED STATES DISTRICT COURT\n DISTRICT OF UTAH, CENTRAL DIVISION\n\n\n Henry Monther, derivatively on behalf of\n POLARITYTE, INC., VERIFIED SHAREHOLDER\n DERIVATIVE COMPLAINT FOR:\n Plaintiff,\n (1) VIOLATIONS OF THE\n vs. SECURITIES EXCHANGE ACT OF\n 1934;\n DENVER LOUGH, MICHAEL BEEGHLEY, (2) BREACH OF FIDUCIARY DUTY;\n WILLIE C. BOGAN, JEFF DYER, STEVEN AND\n (3) UNJUST ENRICHMENT\n GORLIN, JON MOGFORD, JOHN STETSON,\n and EDWARD SWANSON, JURY TRIAL DEMANDED\n Defendants,\n\n and Case No.: 2:18-cv-00791\n\n POLARITYTE, INC., Judge: Tena Campbell\n\n Nominal Defendant.\n\n\n\n\n 1\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 2 of 56\n\n\n\n\n VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT\n\n INTRODUCTION\n\n Plaintiff Henry Monther (\u201cPlaintiff\u201d), by his undersigned attorneys, derivatively and on\n\nbehalf of Nominal Defendant PolarityTE, Inc. (\u201cPolarityTE\u201d or the \u201cCompany\u201d), files this Verified\n\nShareholder Derivative Complaint against Individual Defendants Denver Lough, Michael\n\nBeeghley, Willie C. Bogan, Jeff Dyer, Steven Gorlin, Jon Mogford, John Stetson, and Edward\n\nSwanson (collectively, the \u201cIndividual Defendants,\u201d and together with PolarityTE, the\n\n\u201cDefendants\u201d) for breaches of their fiduciary duties as directors and/or officers of PolarityTE,\n\nunjust enrichment, and violations of Section 14(a) of the Securities Exchange Act of 1934 (the\n\n\u201cExchange Act\u201d). As for his complaint against the Defendants, Plaintiff alleges the following\n\nbased upon personal knowledge as to himself and his own acts, and information and belief as to\n\nall other matters, based upon, inter alia, the investigation conducted by and through Plaintiff\u2019s\n\nattorneys, which included, among other things, a review of the Defendants\u2019 public documents,\n\nconference calls and announcements made by Defendants, United States Securities and Exchange\n\nCommission (\u201cSEC\u201d) filings, wire and press releases published by and regarding PolarityTE, legal\n\nfilings, news reports, securities analysts\u2019 reports and advisories about the Company, and\n\ninformation readily obtainable on the Internet. Plaintiff believes that substantial evidentiary\n\nsupport will exist for the allegations set forth herein after a reasonable opportunity for discovery.\n\n NATURE OF THE ACTION\n\n 1. This is a shareholder derivative action that seeks to remedy wrongdoing committed\n\nby PolarityTE\u2019s directors and officers from March 31, 2017 through the present (the \u201cRelevant\n\nPeriod\u201d).\n\n\n\n\n 2\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 3 of 56\n\n\n\n\n 2. PolarityTE operates as commercial-stage biotechnology and regenerative\n\nbiomaterials company. The Company focuses on discovering, designing and developing a range\n\nof regenerative tissue products and biomaterials for the fields of medicine, biomedical engineering,\n\nand material sciences.\n\n 3. The Company\u2019s flagship development is SkinTE, which is designed to use a\n\npatient\u2019s own skin cells to fill voids left by, for example, wounds or burns. The regrown skin is\n\nfull thickness and bears hair.\n\n 4. The Company was formed through a merger between Majesco Entertainment\n\nCompany and PolarityTE, Inc. (\u201cPolarity NV\u201d), which closed on April 5, 2017 (the \u201cMerger\u201d).\n\n 5. At the time of the Merger, the only asset of Polarity NV was patent application\n\n#14/954,335 (the \u201cPatent\u201d).\n\n 6. On March 31, 2017, the U.S. Patent and Trademark Office (the \u201cUSPTO\u201d) issued\n\na non-final rejection of the Patent.\n\n 7. On June 4, 2018 the USPTO issued its final rejection of the Patent.\n\n 8. Despite these rejections, and the reality that the Company possessed no issued\n\npatents, the Individual Defendants caused the Company to fail to disclose the USPTO\u2019s rejections\n\nof the Patent, while Defendant Denver Lough represented in multiple interviews that the Company\n\npossessed patents on its technology.\n\n 9. On June 25, 2018, Citron Research published a report disclosing the patent\n\nrejections and the Company\u2019s failure to disclose them.\n\n 10. On this news, the price per share of PolarityTE stock fell $10.59, or 27%, from the\n\nprevious day\u2019s trading price, closing at $28.14 on June 25, 2018.\n\n\n\n 3\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 4 of 56\n\n\n\n\n 11. The price of PolarityTE\u2019s stock continued to drop the following day, closing at\n\n$26.41 on June 26, 2018.\n\n 12. During the Relevant Period, the investing public was under a false impression of\n\nthe Company\u2019s business, operations, and financial success.\n\n 13. In breach of their fiduciary duties, the Individual Defendants failed to maintain\n\ninternal controls.\n\n 14. Moreover, during the Relevant Period, the Individual Defendants, in breach of their\n\nfiduciary duties owed to PolarityTE, willfully or recklessly made and/or caused the Company to\n\nmake false and misleading statements. Specifically, the Individual Defendants willfully or\n\nrecklessly made and/or caused the Company to make false and misleading statements and\n\nomissions of material fact that failed to disclose, inter alia, that: (1) the Patent received a non-final\n\nnotice of rejection on May 31, 2017, prior to the closing of the Merger; (2) a final rejection was\n\nassigned to the Patent on June 4, 2018; (3) the commercial viability of the Company was overstated\n\nin light of the USPTO\u2019s rejection of the patent application; and (4) the Company failed to maintain\n\ninternal controls.\n\n 15. As a result of the foregoing, statements about the Company\u2019s business, operations\n\nand prospects were materially false and misleading and lacked a reasonable basis at all relevant\n\ntimes.\n\n 16. The Individual Defendants failed to correct and caused the Company to fail to\n\ncorrect these false and misleading statements and omissions of material fact, rendering them\n\npersonally liable to the Company for breaching their fiduciary duties.\n\n 17. The Individual Defendants\u2019 breaches of fiduciary duty and other misconduct have\n\nsubjected the Company, its Chief Executive Officer (\u201cCEO\u201d) and Chief Scientific Officer\n\n 4\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 5 of 56\n\n\n\n\n(\u201cCSO\u201d), and one of the members of its Board of Directors to two federal securities fraud class\n\naction lawsuits pending in this Court (the \u201cSecurities Class Actions\u201d), the need to undertake\n\ninternal investigations, and losses due to the unjust enrichment of Individual Defendants who were\n\nimproperly over-compensated by the Company, and will likely cost the Company going forward\n\nmillions of dollars.\n\n 18. The Company has been substantially damaged as a result of the Individual\n\nDefendants\u2019 knowing or highly reckless breaches of fiduciary duty and other misconduct.\n\n 19. In light of the breaches of fiduciary duty engaged in by the Individual Defendants,\n\nthe majority of whom are the Company\u2019s current directors, of the collective engagement in fraud\n\nand misconduct by the Company\u2019s directors, of the substantial likelihood of the directors\u2019 liability\n\nin this derivative action, and of their not being disinterested or independent directors, a majority\n\nof the Board cannot consider a demand to commence litigation against themselves on behalf of the\n\nCompany with the requisite level of disinterestedness and independence.\n\n JURISDICTION AND VENUE\n\n 20. This Court has subject matter jurisdiction pursuant to 28 U.S.C. \u00a7 1331 because\n\nPlaintiff\u2019s claims raise a federal question under Section 14(a) of the Exchange Act, 15 U.S.C. \u00a7\n\n78n(a)(1) and Rule 14a-9 of the Exchange Act, 17 C.F.R. \u00a7 240.14a-9.\n\n 21. This Court has subject matter jurisdiction pursuant to 28 U.S.C. \u00a7 1331 because\n\nPlaintiff\u2019s claims raise a federal question pertaining to the claims made in the Securities Class\n\nActions based on violations of the Exchange Act.\n\n 22. This Court has supplemental jurisdiction over Plaintiff\u2019s state law claims pursuant\n\nto 28 U.S.C. \u00a7 1367(a).\n\n\n\n\n 5\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 6 of 56\n\n\n\n\n 23. This derivative action is not a collusive action to confer jurisdiction on a court of\n\nthe United States that it would not otherwise have.\n\n 24. The Court has personal jurisdiction over each of the Defendants because each\n\nDefendant is either a corporation conducting business and maintaining operations in this District,\n\nor he or she is an individual who is a citizen of Utah or who has minimum contacts with this\n\nDistrict to justify the exercise of jurisdiction over them.\n\n 25. Venue is proper in this District because a substantial portion of the transactions and\n\nwrongs complained of herein occurred in this District, one or more of the Defendants either resides\n\nor maintains executive offices in this District, and the Defendants have received substantial\n\ncompensation in this District by engaging in numerous activities that had an effect in this District.\n\n PARTIES\n\n Plaintiff\n\n 26. Plaintiff is a current shareholder of PolarityTE. Plaintiff has continuously held\n\nPolarityTE common stock at all relevant times.\n\n Nominal Defendant PolarityTE\n\n 27. PolarityTE is a Delaware corporation with its principal executive offices at 1960 S.\n\n4250 West, Salt Lake City, Utah 84104. PolarityTE\u2019s shares trade on the NASDAQ under the\n\nticker symbol \u201cPTE.\u201d1\n\n Defendant Lough\n\n 28. Defendant Dr. Denver. Lough (\u201cLough\u201d) served as the Company\u2019s CEO, CSO and\n\nChairman since December 1, 2016. According to the Company\u2019s Schedule 14A filed with the SEC\n\n\n\n\n1 Prior to September 18, 2018, the Company\u2019s stock traded under the ticker symbol \u201cCOOL.\u201d\n\n 6\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 7 of 56\n\n\n\n\non September 13, 2017 (the \u201c2017 Proxy Statement\u201d), as of September 12, 2017, Defendant Lough\n\nbeneficially owned 7,508,336 shares of the Company\u2019s common stock, which represented 54.63%\n\nof the Company\u2019s outstanding common stock. 2 Given that the price per share of the Company\u2019s\n\ncommon stock at the close of trading on September 12, 2017 was $26.01, Lough owned\n\napproximately $195.3 million worth of PolarityTE\u2019s stock.\n\n 29. The Company\u2019s Schedule 14A filed with the SEC on August 17, 2018 (the \u201c2018\n\nProxy Statement\u201d) stated that, as of August 9, 2018, Defendant Lough beneficially owned\n\n8,133,333 shares of the Company\u2019s common stock, which represented 36.3% of the Company\u2019s\n\noutstanding common stock. 3\n\n 30. For the fiscal year ended October 31, 2017, Defendant Lough received $2,536,250\n\nin compensation from the Company. This included $315,000 in salary, a $100,000 bonus, and\n\n$2,121,250 in option awards.\n\n 31. On November 10, 2017, the Company entered into a new employment agreement\n\nwith Defendant Lough, pursuant to which Defendant Lough received a $150,000 continuation\n\nbonus and his base salary was increased to $530,000 per year. Under the new employment\n\nagreement, Defendant Lough\u2019s bonus eligibility is 100% of his base salary.\n\n\n\n\n2 Represented (i) 458,336 shares of Common Stock which represents the vested portion (including\nshares vesting within 60 days) of an option to purchase 1,000,000 shares of Common Stock under\nthe 2017 Plan which option vests in 24 equal monthly installments and (ii) 7,050,000 shares of\nCommon Stock underlying shares of Series E Convertible Preferred Stock. Due to the fact that\nSeries E shares were entitled to 2 votes for every share of common stock that it was convertible\ninto, Defendant Lough possessed approximately 67.81% of the outstanding voting power as of\nSeptember 12, 2017.\n3 Includes 1,083,333 shares of options that were exercisable and/or restricted share awards\nexpected to vest within 60 days of August 9, 2018. On March 6, 2018, the Company received a\nconversion notice for all of Defendant Lough\u2019s Series E Preferred shares.\n\n 7\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 8 of 56\n\n\n\n\n 32. The Company\u2019s 2018 Proxy Statement stated the following about Defendant\n\nLough:\n\n Dr. Denver Lough, 36,4 was appointed our Chairman, Chief Executive Officer and\n Chief Scientific Officer on December 1, 2016 and has continued to serve in this\n capacity throughout 2018. Prior to this appointment served both clinical and\n research roles at multiple institutions. From 2012 until 2016 Dr. Lough was a\n Plastic & Reconstructive Surgery House Staff Officer at Johns Hopkins University\n School of Medicine, Department of Plastic & Reconstructive Surgery. Dr. Lough\n also founded PolarityTE, LLC, PolarityTE NV and Lough & Associates LLC\n which are engaged in the business of developing biomedical intellectual property\n and related fields. Dr. Lough has received numerous accolades and awards by\n national societies related to basic and translational science applications in tissue\n engineering, regenerative medicine, and immunology as well as within solid organ\n and reconstructive transplantation. We believe that Dr. Lough is qualified to serve\n as a member of our Board because of his experience in clinical medicine, surgery,\n research as well as the development and innovation of technologies related to\n regenerative medicine and related patent applications and intellectual property\n which the Company has reviewed for potential development. Dr. Lough holds an\n M.D. and PhD in Biochemistry, Molecular and Cell Biology from Georgetown\n University, which he earned in 2012.[ ]Dr. Lough has served within the Department\n of Surgery and Institute for Plastic Surgery Southern Illinois University School of\n Medicine and Translational Research Director at Laboratory for Regenerative\n Medicine and Applied Sciences. He has served within the Laboratories for\n Craniomaxillofacial Regenerative Medicine at the Johns Hopkins Hospital\n Department of Plastic and Reconstructive Surgery. In addition, Dr. Lough was a\n lead research associate in the Vascularized Composite Allotransplantation\n Laboratory at the Johns Hopkins Hospital Department of Plastic and Reconstructive\n Surgery and has been a research consultant to the Johns Hopkins Hendrix Burn\n Research Center. He has also served within the Brady Urological Institute at the\n Johns Hopkins School of Medicine. Dr. Lough was assembled as a member among\n other burn experts as a Taiwanese presidential disaster response team following the\n largest civilian burn disaster in 2015.\n\n From 2012 until 2016 Dr. Lough was a Plastic & Reconstructive Surgery House\n Staff Officer at Johns Hopkins University School of Medicine, Department of\n Plastic & Reconstructive Surgery. Dr. Lough also founded PolarityTE, LLC,\n PolarityTE NV and Lough & Associates LLC which are engaged in the business of\n developing intellectual property related to regenerative medicine and related fields.\n Dr. Lough has received numerous accolades and awards by national societies\n related to basic and translational science applications in tissue engineering,\n regenerative medicine, and immunology as well as within solid organ and\n reconstructive transplantation. We believe that Dr. Lough is qualified to serve as a\n\n4 Emphasis in original unless otherwise noted throughout.\n\n 8\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 9 of 56\n\n\n\n\n member of our Board because of his experience in clinical medicine and surgery as\n well as the development and innovation of technologies related to regenerative\n medicine and related patent applications and intellectual property which the\n Company has reviewed for potential development. Dr. Lough holds an M.D. and\n PhD in Biochemistry, Molecular and Cell Biology from Georgetown University,\n which he earned in 2012.\n\n Defendant Stetson\n\n 33. Defendant John Stetson (\u201cStetson\u201d) on served as the Company\u2019s Chief Investment\n\nOfficer from June 20, 2018 until he was terminated from all positions at the Company on\n\nSeptember 7, 2018. He previously served as a director from December 2016 to June 29, 2018, and\n\nas the Company\u2019s Chief Financial Officer, Executive Vice President and Secretary from\n\nSeptember 2015 to June 2018. According to the 2017 Proxy Statement, as of September 12, 2017,\n\nDefendant Stetson beneficially owned 478,811 shares of the Company\u2019s common stock,\n\nrepresenting 7.57% of the Company\u2019s outstanding common stock.5 Given that the price per share\n\nof the Company\u2019s common stock at the close of trading on September 12, 2017 was $26.01, Stetson\n\nowned approximately $12.5 million worth of PolarityTE\u2019s stock.\n\n 34. According to a press release issued by the Company on September 7, 2018,\n\nDefendant Stetson was terminated as a result of his being named in a complaint filed that day by\n\nthe SEC against Defendant Stetson and a number of other individuals (the \u201cSEC Action\u201d). Other\n\nnamed defendants in the SEC Action include Barry Honig, who held approximately 9% of the\n\nCompany\u2019s outstanding stock as of August 9, 2018 and Dr. Philip Frost, who was an early investor\n\n\n\n5 Defendant Stetson is the President of Stetson Capital Investments, Inc. (\u201cStetson Capital\u201d), and\nthe Trustee of Stetson Capital Investments, Inc. Retirement Plan (\u201cStetson Retirement Plan\u201d). In\nthese capacities, he has voting and dispositive control over the securities held by such entities.\nDefendant Stetson\u2019s shareholdings represented (i) 332,423 shares of Common Stock held by\nDefendant Stetson, (ii) 19,444 shares of Common Stock held by Stetson Capital, (iii) 39,444 shares\nof Common Stock held by Stetson Retirement Plan and (iv) an option to purchase 87,500 shares\nof Common Stock pursuant to the 2016 Plan.\n\n 9\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 10 of 56\n\n\n\n\nin the Company through the Frost Gamma Investments Trust, which is also a named defendant in\n\nthe SEC Action.\n\n 35. For the fiscal year ended October 31, 2017, Defendant Stetson received $719,250\n\nin compensation from the Company. This included $168,000 in salary and $551,250 in stock\n\nawards.\n\n 36. The Company\u2019s 2018 Proxy Statement stated the following about Defendant\n\nStetson:\n\n John Stetson, 33, has served as our Chief Investment Officer since June 20, 2018.\n He served as our Chief Financial Officer, Executive Vice President and Secretary\n from September 2015 to June 2018, and served as a director form [sic] December\n 2016 through June 2018. Mr. Stetson has been the Managing Member of HS\n Contrarian Investments LLC, a private investment firm with a focus on early stage\n companies since 2010. In addition, Mr. Stetson served as Executive Vice President,\n Chief Financial Officer, and Director of Marathon Patent Group, Inc. (MARA), a\n NASDAQ listed patent monetization company from June 2012 to February 2015.\n Mr. Stetson was President & Co-Founder of Fidelity Property Group, Inc. from\n April 2010 to July 2014, a real estate development group focused on acquisition,\n rehabilitation, and short-term disposition of single family homes. Mr. Stetson\n received his BA in Economics from the University of Pennsylvania.\n\n Defendant Swanson\n\n 37. Defendant Dr. Edward Swanson (\u201cSwanson\u201d) served as a Company director from\n\nDecember 2016 until his resignation on August 7, 2018. He has served as the Company\u2019s Chief\n\nOperating Officer since December 2016. According to the 2017 Proxy Statement, as of September\n\n12, 2017, Defendant Swanson beneficially owned 389,309 shares of the Company\u2019s common\n\nstock, which represented 5.88% of the Company\u2019s outstanding common stock. 6 Given that the\n\n\n6 Represented (i) 370 shares of Common Stock, (ii) 387,750 shares of Common Stock which\nrepresents the vested portion (including shares vesting within 60 days) of an option to purchase\n846,000 shares of Common Stock under the 2017 Plan which option vests in 24 equal monthly\ninstallments and (iii) 1,189 shares of Common Stock acquired by Edward Swanson Roth IRA\n(\u201cRoth IRA\u201d). Defendant Swanson is the Trustee of Roth IRA and in such capacity has voting and\ndispositive control over the securities held by such entity.\n\n 10\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 11 of 56\n\n\n\n\nprice per share of the Company\u2019s common stock at the close of trading on September 12, 2017\n\nwas $26.01, Swanson owned over $10.1 million worth of PolarityTE\u2019s stock.\n\n 38. For the fiscal year ended October 31, 2017, Defendant Swanson received\n\n$2,164,578 in compensation from the Company. This included $270,000 in salary, a $100,000\n\nbonus, and $1,794,578 in option awards.\n\n 39. On November 10, 2017, the Company entered into a new employment agreement\n\nwith Defendant Swanson, pursuant to which Defendant Swanson received a $100,000 continuation\n\nbonus and his base salary was increased to $400,000 per year. Under the new employment\n\nagreement, Defendant Swanson\u2019s bonus eligibility is 100% of his base salary.\n\n 40. The Company\u2019s 2017 Proxy Statement stated the following about Defendant\n\nSwanson:\n\n Dr. Edward Swanson, 33, was appointed as Chief Operating Officer and Director\n of the Company on December 1, 2016. Following completion of his undergraduate\n degree in Applied Sciences in Biomedical Sciences at the School of Engineering\n and Applied Sciences at the University of Pennsylvania, Dr. Swanson received his\n medical degree from Harvard Medical School, where he attended as a student from\n August 2008 to May 2012, graduating with honors for his thesis researching\n surgical outcomes within craniofacial and plastic surgery. From July 2012 until\n December 2016, Dr. Swanson was a Surgical Resident in Plastic & Reconstructive\n Surgery in the Department of Plastic and Reconstructive Surgery at The Johns\n Hopkins University School of Medicine. During his time at Johns Hopkins, he\n served in a leadership role within the residency, sitting on the Program Evaluation\n Committee from July 2015 to December 2016, and The Johns Hopkins Hospital\n House staff Patient Safety and Quality Council from July 2014 to June 2015. Dr.\n Swanson has extensive experience in basic and translational biomedical research,\n including as a research associate in Wound Healing in the Division of Plastic\n Surgery at the Brigham and Women\u2019s Hospital and Harvard Medical School from\n May 2004 to August 2004, thesis student in Traumatic Brain Injury at the\n University of Pennsylvania from August 2006 to May 2007, research fellow in\n Pancreatic Cancer Cellular Biology at the Brigham and Women\u2019s Hospital and\n Harvard Medical School from July 2007 to July 2008, research fellow in\n Nanomedicine at Harvard Medical School and MIT from May 2008 to August\n 2008, and research fellow in Vascularized Composite Allotransplantation at the\n Massachusetts General Hospital and Harvard Medical School during his final year\n of medical school. In addition, Dr. Swanson directed large animal translational\n\n 11\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 12 of 56\n\n\n\n\n research as a lead research associate in the Vascularized Composite\n Allotransplantation Laboratory in the Department of Plastic and Reconstructive\n Surgery at The Johns Hopkins University School of Medicine from July 2014 to\n June 2015, overseeing experimental projects funded by multimillion dollar grants.\n Furthermore, Dr. Swanson has demonstrated national and international leadership\n throughout the field of plastic and reconstructive surgery at a young age, with\n greater than 40 peer-reviewed publications, five book chapters, and 30\n national/international conference presentations. We believe that Dr. Swanson is\n qualified to serve as a member of our Board because of his experience in technology\n related to regenerative medicine and related technologies and their clinical\n applications, which the Company has reviewed for potential development.\n\n Defendant Beeghley\n\n 41. Defendant Michael Beeghley (\u201cBeeghley\u201d) served as a Company director from\n\nDecember 2015 to October 18, 2017. According to the 2017 Proxy Statement, as of September 12,\n\n2017, Defendant Beeghley beneficially owned 79,751 shares of the Company\u2019s common stock,\n\nrepresenting 1.28% of the Company\u2019s outstanding common stock. 7 Given that the price per share\n\nof the Company\u2019s common stock at the close of trading on September 12, 2017 was $26.01,\n\nBeeghley owned approximately $2.1 million worth of PolarityTE\u2019s stock.\n\n 42. For the fiscal year ended October 31, 2017, Defendant Beeghley received $52,250\n\nin compensation from the Company. This included $5,000 in fees earned or paid in cash and\n\n$47,250 in option awards.\n\n 43. The Company\u2019s Schedule 14A filed with the SEC on April 21, 2016 stated the\n\nfollowing about Defendant Beeghley:\n\n Michael Beeghley, age 49, was appointed to our Board of Directors in December\n 2015. Mr. Beeghley has been President and founder of Applied Economics LLC\n (\u201cApplied Economics\u201d), a national corporate finance and financial advisory\n\n7Represented (i) 28,541 shares of Common Stock, (ii) an option to purchase 1,587 shares of\nCommon Stock, (iii) an option to purchase 5,208 shares of Common Stock pursuant to the 2016\nPlan, (iv) an option to purchase 1,915 shares of Common Stock, and (v) 42,500 shares of Common\nStock held by Applied Economics LLC Profit Sharing Plan (\u201cApplied Economics\u201d). Defendant\nBeeghley is the trustee of Applied Economics and in such capacity has voting and dispositive\npower over the securities held by such entity.\n\n 12\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 13 of 56\n\n\n\n\n services firm for 18 years. Mr. Beeghley has testified as an expert and provided\n expert opinions on numerous economic, financial and securities issues. Prior to\n forming Applied Economics, Mr. Beeghley was a Manager in the Corporate\n Finance Group of Ernst & Young, LLP and a Senior Analyst in the Corporate\n Finance Group of PricewaterhouseCoopers. Mr. Beeghley is qualified to serve as a\n director due to his extensive corporate finance background.\n\n Defendant Bogan\n\n 44. Defendant Willie C. Bogan (\u201cBogan\u201d) has served as a Company director since April\n\n2018. A press release issued by the Company on April 24, 2018 announcing Defendant Bogan\u2019s\n\naddition to the Board, stated, in relevant part:\n\n During his tenure as a business and securities attorney, Mr. Bogan was involved in\n a variety of substantial commercial transactions and was an advisor to directors and\n executive management in the boardroom. Through this, Mr. Bogan acquired\n significant business and financial experience, including in relation to lending,\n borrowing, hedging, capital deployment, financial results, mergers and\n acquisitions, risks and risk management. Regarding healthcare, he acquired\n significant insight into supply chain systems and activities, and into the nature,\n opportunities and challenges of healthcare technology businesses. Mr. Bogan also\n has extensive corporate governance experience.\n\n 45. Pursuant to the new Director Compensation Policy approved by the Board on\n\nNovember 10, 2017, Defendant Bogan is entitled to receive the following compensation in\n\nexchange for his service as a director: a quarterly cash retainer or $10,000, 10-year options to\n\npurchase shares of Company stock valued at $150,000, $1,500 for each board meeting attended,\n\n$800 for each committee meeting attended, and $500 for each teleconference called by the\n\nChairman, a committee chair, or the President of the Company.\n\n 46. The Company\u2019s 2018 Proxy Statement stated the following about Defendant\n\nBogan:\n\n Willie C. Bogan joined the Board in April 2018. Mr. Bogan served as Associate\n General Counsel and Corporate Secretary of McKesson Corporation\n (\u201cMcKesson\u201d), a San Francisco-based healthcare services and information\n technology company currently ranked 6th on the Fortune 500, from July 2009 until\n his retirement from McKesson in November 2015. He joined McKesson in\n\n 13\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 14 of 56\n\n\n\n\n November 2006 as Associate General Counsel and Assistant Secretary. Before\n joining McKesson, Mr. Bogan held senior advisory positions at the following\n public companies in the San Francisco Bay Area: Bank of America; Safeway;\n Charles Schwab; and Catellus Development Corporation, a real estate development\n company. Prior to becoming in-house counsel, he was a partner at Steinberg, Miller\n Bogan & Goldstein in Manhattan Beach, California. He started his law career as a\n law firm associate in Los Angeles, California. Mr. Bogan graduated Phi Beta Kappa\n and Summa Cum Laude from Dartmouth College where he majored in Spanish. He\n received an M.A. degree in Politics and Economics from Oxford University where\n he studied as a Rhodes Scholar. He earned his J.D. degree from Stanford Law\n School. Mr. Bogan is qualified to serve as a member of the Board because of his\n knowledge of the healthcare industry and his experience as an advisor to public\n companies and their boards of directors on securities law and corporate governance\n matters.\n\n Defendant Dyer\n\n 47. Defendant Jeff Dyer (\u201cDyer\u201d) has served as a Company director since March 2,\n\n2017, and is the Chair of the Audit Committee. According to the 2017 Proxy Statement, as of\n\nSeptember 12, 2017, Defendant Dyer beneficially owned 64,625 shares of the Company\u2019s common\n\nstock.8 Given that the price per share of the Company\u2019s common stock at the close of trading on\n\nSeptember 12, 2017 was $26.01, Dyer owned approximately $1.7 million worth of PolarityTE\u2019s\n\nstock.\n\n 48. For the fiscal year ended October 31, 2017, Defendant Dyer received $292,699 in\n\ncompensation from the Company. This included $5,000 in fees earned or paid in cash and $287,699\n\nin option awards.\n\n 49. The Company\u2019s 2018 Proxy Statement stated the following about Defendant Dyer:\n\n Jeff Dyer was appointed to our Board of Directors on March 2, 2017. Mr. Dyer has\n served as the Horace Beesley Professor of Strategy at Brigham Young University\n since September 1999. From August 1993 until September 1999 he served as an\n Assistant Professor at Wharton School, University of Pennsylvania, and from July\n 1984 until September 1988 he served as Management Consultant and Manager of\n\n8 Represented 64,625 shares of Common Stock which represents the vested portion (including\nshares vesting within 60 days) of an option to purchase 141,000 shares of Common Stock under\nthe 2017 Plan which option vests in 24 equal monthly installments.\n\n 14\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 15 of 56\n\n\n\n\n Bain & Company. Mr. Dyer received his Bachelor of Science degree in psychology\n and MBA from Brigham Young University and his PhD in management from\n University of California, Los Angeles. Mr. Dyer is qualified to serve as a member\n of the Company\u2019s Board because of his extensive business and management\n expertise and knowledge of capital markets.\n\n Defendant Gorlin\n\n 50. Defendant Steve Gorlin (\u201cGorlin\u201d) has served as a director since 2017, and is a\n\nmember of the Audit Committee. According to the 2017 Proxy Statement, as of September 12,\n\n2017, Defendant Gorlin beneficially owned 18,751 shares of the Company\u2019s common stock. 9\n\nGiven that the price per share of the Company\u2019s common stock at the close of trading on September\n\n12, 2017 was $26.01, Gorlin owned over $487,713 worth of PolarityTE\u2019s stock.\n\n 51. For the fiscal year ended October 31, 2017, Defendant Gorlin received $400,688 in\n\ncompensation from the Company. This included $5,000 in fees earned or paid in cash, $237,000\n\nin stock awards, and $158,688 in option awards.\n\n 52. The Company\u2019s 2018 Proxy Statement stated the following about Defendant\n\nGorlin:\n\n Steve Gorlin joined the Board in February 2017. Mr. Gorlin helped found several\n biotechnology and pharmaceutical companies over the past 40 years, including\n Hycor Biomedical, Inc. (acquired by Agilent), Theragenics Corporation (NYSE:\n TGX), CytRx Corporation (NASDAQ: CYTR), Medicis Pharmaceutical\n Corporation (acquired by Valeant), EntreMed, Inc. (NASDAQ: ENMD), MRI\n Interventions, DARA BioSciences, Inc. (NASDAQ: DARA), MiMedx Group, Inc.\n (NASDAQ: MDXG), and Medivation, Inc. (NASDAQ: MDVN). Since December\n 2014, Mr. Gorlin has served as a director of Catasys, Inc. and Co-Chairman of the\n board of directors of Medovex, Inc., and since May 2011 he has served on the board\n of directors of NTC China, Inc. In addition, since 2011, Mr. Gorlin has served as a\n member of the board of directors of DemeRX, Inc. (\u201cDemeRX\u201d) and from 2011\n until 2012 he served as Chairman of the board of DemeRX. Since July 2015, he has\n also served as Vice Chairman of the board of NantKwest, Inc. and from July 2013\n until May 2015 he served on various executive committees and the board of\n\n9Represented 18,751 shares of Common Stock which represents the vested portion (including\nshares vesting within 60 days) of an option to purchase 50,000 shares of Common Stock under the\n2017 Plan which option vests in 24 equal monthly installments.\n\n 15\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 16 of 56\n\n\n\n\n directors of Conkwest, Inc., a private company, which is now NantKwest, Inc.\n From November 2006 until June 2013, Mr. Gorlin served as a member of the board\n of directors of MiMedx Group, Inc. From 2010 until 2014 Mr. Gorlin served on the\n Business Advisory Council to the Johns Hopkins School of Medicine, from 2011\n until 2013 he served on The Johns Hopkins BioMedical Engineering Advisory\n Board and from 2007 until 2011 he served on the Board of the Andrews Institute.\n He is presently a member of the Research Institute Advisory Committee (RIAC) of\n Massachusetts General Hospital. Mr. Gorlin founded a number of non-medical\n related companies, including Perma-Fix, Inc., Pretty Good Privacy, Inc. (sold to\n Network Associates), Judicial Correction Services, Inc. (sold to Correctional\n Healthcare) and NTC China, Inc. He started The Touch Foundation, a nonprofit\n organization for the blind and was a principal financial contributor to the founding\n of Camp Kudzu for diabetic children. Mr. Gorlin is qualified to serve as a member\n of the Company\u2019s Board because of his experience in regenerative medicine and\n pharmaceutical drug and medical device research and development.\n\n Defendant Mogford\n\n 53. Defendant Dr. Jon Mogford (\u201cMogford\u201d) has served as a Company director since\n\nFebruary 2017. According to the 2017 Proxy Statement, as of September 12, 2017, Defendant\n\nMogford beneficially owned 18,751 shares of the Company\u2019s common stock. 10 Given that the\n\nprice per share of the Company\u2019s common stock at the close of trading on September 12, 2017\n\nwas $26.01, Mogford owned over $487,713 worth of PolarityTE\u2019s stock.\n\n 54. For the fiscal year ended October 31, 2017, Defendant Mogford received $400,688\n\nin compensation from the Company. This included $5,000 in fees earned or paid in cash, $237,000\n\nin stock awards, and $158,688 in option awards.\n\n 55. The Company\u2019s 2018 Proxy Statement stated the following about Defendant\n\nMogford:\n\n Dr. Jon Mogford was appointed to our Board of Directors on February 8, 2017. Dr.\n Mogford has served in various capacities for the Texas A&M University System\n (\u201cTexas A&M\u201d). Since May 2013, Dr. Mogford has served as the Vice Chancellor\n for Research, from August 2012 until April 2013 he served as the Chief Research\n\n10Represented 18,751 shares of Common Stock which represents the vested portion (including\nshares vesting within 60 days) of an option to purchase 50,000 shares of Common Stock under the\n2017 Plan which option vests in 24 equal monthly installments.\n\n 16\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 17 of 56\n\n\n\n\n Officer and from November 2011 until August 2012 he served as Associate Vice\n Chancellor for Strategic Initiatives at Texas A&M. Prior to joining Texas A&M in\n 2011, from February 2010 until October 2011, Dr. Mogford served as Deputy\n Director of the Defense Sciences Office (DSO) of the Defense Advanced Research\n Projects Agency (DARPA) in the U.S. Department of Defense. From July 2005\n until January 2009, Dr. Mogford served as Program Manager of DSO of DARPA.\n In addition, since November 2016, Dr. Mogford has served as a member of the\n board of directors of Medovex Corp. Dr. Mogford is the recipient of the Secretary\n of Defense Medal for Outstanding Public Service. Dr. Mogford obtained his\n bachelor\u2019s degree in Zoology from Texas A&M University and doctorate in\n Medical Physiology from the Texas A&M University Health Science Center,\n College Station, Texas. His research in vascular physiology continued at the\n University of Chicago as a Postdoctoral fellow from 1997 until 1998. Dr. Mogford\n transitioned his research focus to the field of wound healing at Northwestern\n University, both as a Research Associate and also as a Research Assistant Professor\n from 1998 until 2003. He then served as a Life Sciences Consultant to DARPA on\n the Revolutionizing Prosthetics program from December 2003 until June 2005. Dr.\n Mogford is qualified to serve as a member of the Company\u2019s Board because of his\n experience and research in regenerative medicine.\n\n FIDUCIARY DUTIES OF THE INDIVIDUAL DEFENDANTS\n\n 56. By reason of their positions as officers and/or directors of PolarityTE and because\n\nof their ability to control the business and corporate affairs of PolarityTE, the Individual\n\nDefendants owed PolarityTE and its shareholders fiduciary obligations of trust, loyalty, good faith,\n\nand due care, and were and are required to use their utmost ability to control and manage\n\nPolarityTE in a fair, just, honest, and equitable manner. The Individual Defendants were and are\n\nrequired to act in furtherance of the best interests of PolarityTE and its shareholders so as to benefit\n\nall shareholders equally.\n\n 57. Each director and officer of the Company owes to PolarityTE and its shareholders\n\nthe fiduciary duty to exercise good faith and diligence in the administration of the Company and\n\nin the use and preservation of its property and assets and the highest obligations of fair dealing.\n\n\n\n\n 17\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 18 of 56\n\n\n\n\n 58. The Individual Defendants, because of their positions of control and authority as\n\ndirectors and/or officers of PolarityTE, were able to and did, directly or indirectly, exercise control\n\nover the wrongful acts complained of herein.\n\n 59. To discharge their duties, the officers and directors of PolarityTE were required to\n\nexercise reasonable and prudent supervision over the management, policies, controls, and\n\noperations of the Company.\n\n 60. Each Individual Defendant, by virtue of his or her position as a director and/or\n\nofficer, owed to the Company and to its shareholders the highest fiduciary duties of loyalty, good\n\nfaith, and the exercise of due care and diligence in the management and administration of the\n\naffairs of the Company, as well as in the use and preservation of its property and assets. The\n\nconduct of the Individual Defendants complained of herein involves a knowing and culpable\n\nviolation of their obligations as directors and officers of PolarityTE, the absence of good faith on\n\ntheir part, or a reckless disregard for their duties to the Company and its shareholders that the\n\nIndividual Defendants were aware or should have been aware posed a risk of serious injury to the\n\nCompany. The conduct of the Individual Defendants who were also officers and directors of the\n\nCompany has been ratified by the remaining Individual Defendants who collectively comprised\n\nPolarityTE\u2019s Board at all relevant times.\n\n 61. As senior executive officers and directors of a publicly-traded company whose\n\ncommon stock was registered with the SEC pursuant to the Exchange Act and traded on the\n\nNASDAQ, the Individual Defendants had a duty to prevent and not to effect the dissemination of\n\ninaccurate and untruthful information with respect to the Company\u2019s financial condition,\n\nperformance, growth, operations, financial statements, business, products, management, earnings,\n\ninternal controls, and present and future business prospects, including the dissemination of false\n\n\n 18\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 19 of 56\n\n\n\n\ninformation regarding the Company\u2019s business, prospects, and operations, and had a duty to cause\n\nthe Company to disclose in its regulatory filings with the SEC all those facts described in this\n\nComplaint that it failed to disclose, so that the market price of the Company\u2019s common stock\n\nwould be based upon truthful and accurate information.\n\n 62. To discharge their duties, the officers and directors of PolarityTE were required to\n\nexercise reasonable and prudent supervision over the management, policies, practices, and internal\n\ncontrols of the Company. By virtue of such duties, the officers and directors of PolarityTE were\n\nrequired to, among other things:\n\n (a) ensure that the Company was operated in a diligent, honest, and prudent\n\nmanner in accordance with the laws and regulations of Delaware, Utah, and the United States, and\n\npursuant to PolarityTE\u2019s own Code of Conduct and Business Ethics;\n\n (b) conduct the affairs of the Company in an efficient, business-like manner so\n\nas to make it possible to provide the highest quality performance of its business, to avoid wasting\n\nthe Company\u2019s assets, and to maximize the value of the Company\u2019s stock;\n\n (c) remain informed as to how PolarityTE conducted its operations, and, upon\n\nreceipt of notice or information of imprudent or unsound conditions or practices, to make\n\nreasonable inquiry in connection therewith, and to take steps to correct such conditions or\n\npractices;\n\n (d) establish and maintain systematic and accurate records and reports of the\n\nbusiness and internal affairs of PolarityTE and procedures for the reporting of the business and\n\ninternal affairs to the Board and to periodically investigate, or cause independent investigation to\n\nbe made of, said reports and records;\n\n\n\n\n 19\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 20 of 56\n\n\n\n\n (e) maintain and implement an adequate and functioning system of internal\n\nlegal, financial, and management controls, such that PolarityTE\u2019s operations would comply with\n\nall applicable laws and PolarityTE\u2019s financial statements and regulatory filings filed with the SEC\n\nand disseminated to the public and the Company\u2019s shareholders would be accurate;\n\n (f) exercise reasonable control and supervision over the public statements\n\nmade by the Company\u2019s officers and employees and any other reports or information that the\n\nCompany was required by law to disseminate;\n\n (g) refrain from unduly benefiting themselves and other Company insiders at\n\nthe expense of the Company; and\n\n (h) examine and evaluate any reports of examinations, audits, or other financial\n\ninformation concerning the financial affairs of the Company and to make full and accurate\n\ndisclosure of all material facts concerning, inter alia, each of the subjects and duties set forth\n\nabove.\n\n 63. Each of the Individual Defendants further owed to PolarityTE and the shareholders\n\nthe duty of loyalty requiring that each favor PolarityTE\u2019s interest and that of its shareholders over\n\ntheir own while conducting the affairs of the Company and refrain from using their position,\n\ninfluence or knowledge of the affairs of the Company to gain personal advantage.\n\n 64. At all times relevant hereto, the Individual Defendants were the agents of each other\n\nand of PolarityTE and were at all times acting within the course and scope of such agency.\n\n 65. Because of their advisory, executive, managerial, and directorial positions with\n\nPolarityTE, each of the Individual Defendants had access to adverse, non-public information about\n\nthe Company.\n\n\n\n\n 20\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 21 of 56\n\n\n\n\n 66. The Individual Defendants, because of their positions of control and authority, were\n\nable to and did, directly or indirectly, exercise control over the wrongful acts complained of herein,\n\nas well as the contents of the various public statements issued by PolarityTE.\n\n CONSPIRACY, AIDING AND ABETTING, AND CONCERTED ACTION\n\n 67. In committing the wrongful acts alleged herein, the Individual Defendants have\n\npursued, or joined in the pursuit of, a common course of conduct, and have acted in concert with\n\nand conspired with one another in furtherance of their wrongdoing. The Individual Defendants\n\ncaused the Company to conceal the true facts as alleged herein. The Individual Defendants further\n\naided and abetted and assisted each other in breaching their respective duties.\n\n 68. The purpose and effect of the conspiracy, common enterprise, and common course\n\nof conduct was, among other things, to: (i) facilitate and disguise the Individual Defendants\u2019\n\nviolations of law, including breaches of fiduciary duty, unjust enrichment, and violations of\n\nSection 14(a) of the Exchange Act; (ii) conceal adverse information concerning the Company\u2019s\n\noperations, financial condition, legal compliance, future business prospects and internal controls;\n\nand (iii) artificially inflate the Company\u2019s stock price.\n\n 69. The Individual Defendants accomplished their conspiracy, common enterprise, and\n\ncommon course of conduct by causing the Company purposefully or recklessly to conceal material\n\nfacts, fail to correct such misrepresentations, and violate applicable laws. In furtherance of this\n\nplan, conspiracy, and course of conduct, the Individual Defendants collectively and individually\n\ntook the actions set forth herein. Because the actions described herein occurred under the authority\n\nof the Board, each of the Individual Defendants who is a director of PolarityTE was a direct,\n\nnecessary, and substantial participant in the conspiracy, common enterprise, and common course\n\nof conduct complained of herein.\n\n\n 21\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 22 of 56\n\n\n\n\n 70. Each of the Individual Defendants aided and abetted and rendered substantial\n\nassistance in the wrongs complained of herein. In taking such actions to substantially assist the\n\ncommission of the wrongdoing complained of herein, each of the Individual Defendants acted with\n\nactual or constructive knowledge of the primary wrongdoing, either took direct part in, or\n\nsubstantially assisted in the accomplishment of that wrongdoing, and was or should have been\n\naware of his or her overall contribution to and furtherance of the wrongdoing.\n\n 71. At all times relevant hereto, each of the Individual Defendants was the agent of\n\neach of the other Individual Defendants and of PolarityTE, and was at all times acting within the\n\ncourse and scope of such agency.\n\n POLARITYTE\u2019S CODE OF CONDUCT\n\n 72. Pursuant to the Company\u2019s Code of Conduct and Business Ethics (the \u201cCode of\n\nConduct\u201d), the Code of Conduct \u201capplies to all employees, Officers and Directors of PolarityTE,\n\nInc. and its subsidiaries worldwide (collectively, \u2018Polarity\u2019, \u2018POLARITY\u2019, \u2018Company\u2019, \u2018we\u2019, \u2018us\u2019\n\nor \u2018our\u2019).\u201d\n\n 73. The Code of Conduct provides, as to \u201cCompliance with Laws and Regulations,\u201d in\n\nrelevant part, that:\n\n Our global business operations are highly regulated. Obeying laws and regulations,\n both in letter and in spirit, is the foundation upon which this Code is built and how\n our Company conducts its business. It is the responsibility of all POLARITY\n Personnel to be familiar with and to comply with the governmental and other laws,\n rules and regulations that apply to our operations.\n\n 74. The Code of Conduct provides, as to a \u201cRecord Keeping,\u201d in relevant part, that:\n\n The Company is required to compile and maintain numerous records and\n substantial information, and to file reports and applications with various\n government agencies. Virtually all of these agencies operate under laws that make\n it a crime \u2013 punishable by fines and/or imprisonment \u2013 to knowingly submit false\n or incomplete information, to fail to submit required information, or to fail to\n\n\n 22\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 23 of 56\n\n\n\n\n submit information within the required time period. Carelessness alone may be\n viewed as constituting an offense in some instances and may, however incorrectly,\n call into question the Company\u2019s competency and good faith. Accordingly, Polarity\n requires POLARITY Personnel that prepare information, records, or submissions\n for governmental agencies, or who otherwise deal with such agencies, to do so in a\n diligent, accurate, timely, and ethical manner.\n\n 75. The Code of Conduct provides, as to \u201cPublic Disclosure,\u201d in relevant part, that:\n\n Full, fair, accurate, timely, and understandable financial disclosure is required in\n all reports and documents that the Company files with, or submits to, any regulatory\n body, including the Securities and Exchange Commission (the \u201cSEC\u201d), as well as\n in any public communications.\n\n All POLARITY Personnel who participate in the preparation of any part of the\n Company\u2019s financial statements, SEC and other regulatory financial disclosures\n and/or other public communications \u2013 including, but not limited to, the principal\n executive officer, the principal financial officer, the controller or principal\n accounting officer, and any other employee who performs a similar function \u2013\n have a responsibility to ensure that these disclosures and communications are\n complete and accurate and that they do not contain any false or materially\n misleading entries or information.\n\n POLARITY Personnel with concerns regarding the Company\u2019s SEC disclosures,\n accounting or internal accounting controls or auditing matters must report those\n concerns promptly using one of the mechanisms discussed in Section 12 below or\n by contacting the Audit Committee directly in accordance with the Company\u2019s\n Audit Committee Procedures for Handling Accounting and Auditing Complaints\n and Concerns.\n\n(Emphasis added.)\n\n 76. The Code of Conduct provides, as to \u201cSubmitting Complaint and Reporting\n\nPotential Violations,\u201d in relevant part that:\n\n All POLARITY Personnel have a duty to promptly report concerns about suspected\n violations of our Code, our policies and procedures, and any applicable laws and\n regulations. A failure to report a known or suspected violation of this Code is a\n Code violation in itself.\n\n POLARITY Personnel may report known or suspected violations of this Code and\n the legal requirements it covers to his or her manager, Human Resources, and/or to\n Polarity\u2019 General Counsel. Employees may also report Code violations or any\n compliance-related concerns through the Polarity Hotline . . . or by going to the\n Polarity Intranet . . . Such reports may be made anonymously.\n\n\n 23\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 24 of 56\n\n\n\n\n(Bold and italic emphasis added, red text in original.)\n\n 77. In violation of the Code of Conduct, the Individual Defendants conducted little, if\n\nany, oversight of the Company\u2019s engagement in the Individual Defendants\u2019 scheme to issue\n\nmaterially false and misleading statements to the public and to facilitate and disguise the Individual\n\nDefendants\u2019 violations of law, including breaches of fiduciary duty, unjust enrichment, and\n\nviolations of Section 14(a) of the Exchange Act. Moreover, in violation of the Code of Conduct,\n\nthe Individual Defendants failed to maintain the accuracy of Company records and reports, comply\n\nwith laws and regulations, conduct business in an honest and ethical manner, and properly report\n\nviolations of the Code of Conduct.\n\n INDIVIDUAL DEFENDANTS\u2019 MISCONDUCT\n\n Background\n\n 78. PolarityTE operates as commercial-stage biotechnology and regenerative\n\nbiomaterials company. The Company focuses on discovering, designing and developing a range\n\nof regenerative tissue products and biomaterials for the fields of medicine, biomedical engineering,\n\nand material sciences. Its PolarityTE platform would be able to provide transform tissue\n\nregeneration, including potential regeneration of multiple tissue substrates, such as skin, bone,\n\nmuscle, fat, cartilage, nerves, and blood vessels, as well as neural elements, solid and hollow organ\n\ncomposite tissue systems.\n\n 79. The Company\u2019s flagship development is SkinTE, which is designed to use a\n\npatient\u2019s own skin cells to fill voids left by events such as wounds or burns. The regrown skin is\n\nfull thickness and bears hair.\n\n\n\n\n 24\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 25 of 56\n\n\n\n\n 80. PolarityTE, as it exists today, was formed through a merger between Majesco\n\nEntertainment Company and PolarityTE, Inc. (\u201cPolarity NV\u201d) These companies entered into an\n\nagreement for Majesco to acquire Polarity NV on December 1, 2016.\n\n 81. Also, on December 1, 2016, Majesco hired Defendant Lough as CEO, CSO and\n\nChairman and hired Defendant Swanson as COO. Defendants Lough and Swanson staked their\n\npersonal and professional futures on the success of the Company, as both irrevocably departed\n\nfrom prestigious residencies at Johns Hopkins Hospital Department of Plastic and Reconstructive\n\nSurgery in order to run PolarityTE.\n\n 82. As explained in the Company\u2019s quarterly report for the period ended January 31,\n\n2017, filed with the SEC on March 16, 2017 (the \u201cQ1 2017 10-Q\u201d), the Merger was designed to\n\nprovide the Company ownership of intellectual property belonging to Defendant Lough. The Q1\n\n2017 10-Q stated, in relevant part:\n\n Dr. Lough is the named inventor under a pending patent application for a novel\n regenerative medicine and tissue engineering platform filed in the United States\n and elsewhere. The Company believes that its future success depends significantly\n on its ability to protect its inventions and technology. Accordingly, the Company\n is seeking to acquire the pending patent application. Prior to December 1, 2016 no\n employees, consultants or partners engaged in any business activity related to the\n patent application and no licenses or contracts were granted related to the patent\n application, other than professional services related to preparation and filing of the\n patent. On December 1, 2016 Dr. Lough assigned the patent application as well\n as all related intellectual property to a newly-formed Nevada corporation,\n PolarityTE, Inc. (\u201cPolarity NV\u201d), and the Company entered into an Agreement\n and Plan of Reorganization (the \u201cAgreement\u201d) with Polarity NV and Dr. Lough.\n\n As a result, at closing, the patent application would be owned by the Company\n without the need for further assignments or recordation with the Patent Trademark\n Office.\n\n There was never any intent to acquire an ongoing business and no ongoing business\n was acquired. The asset is preserved in a stand-alone entity merely as a vehicle to\n provide the Company a seamless means to acquire the asset (a patent application)\n without undue cost, expense and time. Polarity NV has never had employees and\n therefore no employees will be acquired in the transaction.\n\n 25\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 26 of 56\n\n\n\n\n(Emphasis added.) Upon information and belief, the Q1 2017 10-Q\u2019s reference to the patent\n\napplication is referring to the Patent.\n\n 83. Prior to the Merger, Defendant Lough owned 100% of the issued and outstanding\n\nshares of capital stock of Polarity NV.\n\n 84. At the closing of the Merger, Defendant Lough was issued 7,050 shares of the\n\nCompany\u2019s newly authorized Series E Preferred Stock (the \u201cPreferred Shares\u201d) convertible into\n\nan aggregate of 7,050,000 shares of the Company\u2019s common stock, representing 40.95% of the\n\nCompany\u2019s then-issued and outstanding shock on an as diluted basis. The Preferred Shares were\n\nentitled to 2 votes for every 1 share of common stock. At the time of the merger, it was reported\n\nthat Defendant Lough\u2019s shares had a fair value of approximately $104.7 million. 11\n\n 85. The Merger closed on April 5, 2017. On April 7, 2017, the Company announced\n\nthat the Merger had been completed.\n\n 86. On June 23, 2017, the Company entered into an agreement divesting all of its\n\ngaming assets. Since the divestment of its gaming assets, the Company has operated exclusively\n\nas in the area of regenerative medicine.\n\n 87. On March 29, 2018, the Company filed an S-8 Registration Statement with the\n\nSEC.\n\n 88. On June 4, 2018, the Company issued a press release announcing a public offering\n\nof shares of common stock. With respect to proceeds of the sale, the press release asserted that:\n\n PolarityTE intends to use the net proceeds from the offering for research and\n development of its products and product candidates, efforts toward\n\n\n11On March 6, 2018, the Company received a conversion notice for all of Defendant Lough\u2019s\nSeries E Preferred shares.\n\n 26\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 27 of 56\n\n\n\n\n commercialization and required registration or approval of its products and product\n candidates with applicable regulatory authorities and general corporate purposes.\n\n 89. On June 5, 2018, the Company announced that the follow-on public offering had\n\nbeen priced, and was expected to generate gross proceeds of approximately $55 million.\n\n The Patent\n\n 90. The patent application obtained through the Merger was patent #14/954,335 (the\n\n\u201cPatent\u201d).\n\n 91. On March 31, 2017, the USPTO issued a non-final rejection of the Patent.\n\n 92. On April 7, 2017\u2014the same day that the Merger was completed\u2014the USPTO\n\nmailed its non-final rejection of the Patent.\n\n 93. On June 4, 2018, the USPTO issued a final rejection of the Patent.\n\n 94. On June 14, 2018, the USPTO mailed its final rejection of the Patent.\n\n 95. Despite these developments, the Individual Defendants caused the Company to fail\n\nto disclose either the non-final or the final rejection of the Patent.\n\n False and Misleading Statements\n\n August 2017 Forbes Article\n\n 96. Defendant Dyer contributed to an article published by Forbes on August 8, 2017,\n\ntitled \u201cPolarity TE: Will this Biotech Be the Next Amazon or Tesla?\u201d The article touted PolarityTE\n\nas the next big thing in biotech, stating that: \u201cPolarityTE\u2019s technology \u2014 if it works \u2014 will be\n\nextremely disruptive to incumbents.\u201d\n\n 97. The article further lauded the interest and investment of investor Phillip Frost in\n\nPolarityTE, stating, in relevant part:\n\n Despite the promise of PolarityTE\u2019s technology, Lough and Swanson would likely\n never have resigned from Hopkins to pursue the venture without an innovative\n\n 27\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 28 of 56\n\n\n\n\n financing model. . . Enter billionaire investor Philip Frost and his investment team.\n In the biotech sector, and especially in small cap ventures, there is no bigger name\n than Dr. Philip Frost. Across a career spanning over 40 years, Frost has built a net\n worth over 4 billion dollars, the vast majority of which derives from founding,\n buying, selling and investing in biotechnology companies. 12\n\n 98. The Forbes article was published after the Company filed a Registration Statement\n\non Form S-3 on July 27, 2017, but prior to such Registration Statement being declared effective.\n\nThe SEC expressed concern that the article constituted unlawful \u201cgun-jumping\u201d in oral\n\ncommunications with the Company and in a letter addressed to Defendant Lough dated August 23,\n\n2017. Ultimately, the Company avoided liability by not offering the securities registered in the\n\nJuly 27, 2017 Form S-3 for more than thirty days after the Forbes article was published.\n\n Fox Business Interview\n\n 99. In an interview with Fox Business published on October 24, 2017, Defendant\n\nLough said to Fox Business\u2019 Jade Scipioni, regarding the Company\u2019s SkinTE technology, that\n\n\u201cWe found out this was sort of a novel technology and we ended up patenting it and being\n\napproached by a variety of investors to say hey, why don\u2019t we bring this to market . . .\u201d 13\n\n 100. As a result of Defendant Lough\u2019s misrepresentations, Fox Business stated in the\narticle accompanying a video clip of the interview that \u201cSkinTE, was developed last year by a team\n\nof former Johns Hopkins doctors who discovered a way to regenerate a patient\u2019s own skin using\n\ntheir patented technology.\u201d14\n\n\n\n\n12\n On September 7, 2018, Philip Frost was named as a defendant in the SEC Action, which alleged\nhis participation in \u201clong running and fraudulent schemes\u201d whereby he and others orchestrated\npump-and-dump schemes involving small, publicly traded companies.\n13 Emphasis added.\n14 Emphasis added.\n\n\n 28\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 29 of 56\n\n\n\n\n 2017 Proxy Statement\n\n 101. On September 13, 2017, the Company issued the 2017 Proxy Statement.\nDefendants Lough, Stetson, Swanson, Gorlin, Dyer, and Mogford solicited the 2017 Proxy\n\nStatement filed pursuant to Section 14(a) of the Exchange Act, which contained material\n\nmisstatements and omissions.15\n\n 102. The 2017 Proxy Statement stated, regarding the Company\u2019s Code of Conduct, that:\n Our Code of Conduct (the \u201cCode\u201d), which was amended and restated as of August\n 11, 2017, applies to the Company\u2019s employees, directors, officers, contractors,\n consultants, and persons performing similar functions (\u201cCovered Persons\u201d). This\n includes our CEO and Chairman, our chief financial officer (\u201cCFO\u201d), and our Chief\n Operating Officer (\u201cCOO\u201d), among others. We require that they avoid conflicts of\n interest, comply with applicable laws, protect Company assets, and conduct\n business in an ethical and responsible manner and in accordance with the Code.\n The Code prohibits employees from taking unfair advantage of our business\n partners, competitors, and employees through manipulation, concealment,\n misuse of confidential or privileged information, misrepresentation of material\n facts, or any other practice of unfair dealing or improper use of information. The\n Code requires employees to comply with all applicable laws, rules, and regulations\n wherever in the world we conduct business. This includes applicable laws on\n privacy and data protection, anti-corruption and anti-bribery, and trade sanctions.\n Our Code was amended and restated in 2017 to better reflect our expanding\n operations and diverse employee base, enhance its clarity and general readability,\n and to make other stylistic changes to more closely align the Code with our overall\n brand. Our Code is publicly available and can be found on our website at\n http://www.polarityte.com/ by following the link to \u201cInvestors\u201d and then to\n \u201cGovernance.\u201d\n\n If we make substantive amendments to the Code, or grant any waiver, including\n any implicit waiver, from a provision of the Code to our CEO and Chairman, CFO,\n controller/treasurer, and any of our other officers, financial professionals, and\n persons performing similar functions, we will disclose the nature of such\n amendment or waiver on our website or in a report filed with the SEC on Form 8-\n K. [Emphasis added.]\n\n\n15\n Plaintiff\u2019s allegations with respect to the misleading statements in the 2017 Proxy Statement are\nbased solely on negligence; they are not based on any allegation of reckless or knowing conduct\nby or on behalf of the Individual Defendants, and they do not allege, and do not sound in, fraud.\nPlaintiff specifically disclaims any allegations of, reliance upon any allegation of, or reference to\nany allegation of fraud, scienter, or recklessness with regard to these allegations and related claims.\n\n 29\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 30 of 56\n\n\n\n\n 103. The 2017 Proxy Statement was false and misleading because, despite assertions to\nthe contrary, its Code of Conduct was not followed, as the Individual Defendants allowed false\n\nand misleading statements to be issued to the investing public.\n\n 104. The Individual Defendants also caused the 2017 Proxy Statement to be false and\nmisleading with regard to executive compensation in that they purported to employ \u201cpay-for-\n\nperformance\u201d elements while failing to disclose that the Company\u2019s financial prospects were\n\nmisrepresented as a result of false and misleading statements, causing the Company\u2019s share price\n\nto be artificially inflated and allowing the Individual Defendants to wrongfully benefit from the\n\nfraud alleged herein.\n\n 105. Further, the 2017 Proxy Statement failed to disclose that: (1) the Patent received a\nnon-final notice of rejection on May 31, 2017, prior to the closing of the Merger; (2) the\n\ncommercial viability of the Company was overstated in light of the USPTO\u2019s rejection of the\n\npatent application; (3) the Company failed to maintain internal controls; and (4) due to the\n\nforegoing, Defendants\u2019 statements regarding the Company\u2019s business, operations, and prospects\n\nwere materially false, misleading, and lacked a reasonable basis in fact at all relevant times.\n\n November 3, 2017 Form 8-K\n\n 106. On November 3, 2017, the Company filed a Form 8-K with the SEC. In addition to\nrevealing that the Company had received a notice of delisting from NASDAQ as a result of its\n\nfailure to comply with the requirement that the Board be comprised of a majority of independent\n\ndirectors, the filing updated the Company\u2019s risk disclosures in light of the divestment of the\n\nCompany\u2019s gaming business. Although the USPTO\u2019s non-final rejection had been issued some\n\nseven months earlier, the Form 8-K failed to disclose such information, stating, in relevant part:\n\n\n\n\n 30\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 31 of 56\n\n\n\n\n Our success depends significantly on our ability to protect our proprietary rights\n in technologies that presently consist of trade secrets and patent applications. We\n currently have no issued patents relating to any of our product candidates. We\n intend to expand our patenting activities and rely on patent protection, as well as a\n combination of copyright, trade secret and trademark laws and nondisclosure,\n confidentiality and other contractual restrictions to protect our proprietary\n technology, and there can be no assurance these methods of protection will be\n effective. These legal means afford only limited protection and may not adequately\n protect our rights or permit us to gain or keep any competitive advantage. In\n addition, our presently pending patent applications include claims to material\n aspects of our activities that are not currently protected by issued patents. The\n patent application process can be time consuming and expensive. We cannot ensure\n that any of the pending patent applications we acquire, have acquired, or may file\n will result in issued patents. Competitors may be able to design around our patents\n or develop procedures that provide outcomes that are comparable or even superior\n to ours. We also cannot assure you that the inventors of the patents and applications\n that we expect to own or license were the first-to-invent or the first-inventor-to-file\n on the inventions, or that a third party will not claim ownership in one of our patents\n or patent applications. We cannot assure you that a third party does not have or will\n not obtain patents that dominate the patents we own or license now or in the future.\n\n The failure to obtain and maintain patents and/or protect our intellectual property\n rights could have a material and adverse effect on our business, results of\n operations, and financial condition. We cannot be certain that, if challenged, any\n patents we ultimately obtain would be upheld because a determination of the\n validity of a patent involves complex issues of fact and law. If one or more of those\n patents is invalidated, that could reduce or eliminate any competitive advantage we\n might otherwise have had.\n\n(Emphasis added.)\n\n BioInformant Interview\n\n 107. On January 27, 2018, BioInformant published an interview held with Defendant\nLough, during which Defendant Lough represented that the Company possessed patents for its\n\ntechnologies. The publication stated, in relevant part:\n\n Cade Hildreth: How did you come up with the technology?\n\n Dr. Denver Lough: That\u2019s a loaded question and being a public company with\n patented and proprietary materials, I can\u2019t go into too much detail.\n\n\n(Emphasis added.)\n\n 31\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 32 of 56\n\n\n\n\n 2017 Form 10-K\n\n 108. On January 30, 2018, the Company filed its annual report on Form 10-K with the\nSEC for the fiscal quarter and year ended October 31, 2017 (the \u201c2017 10-K\u201d), signed by\n\nDefendants Lough, Stetson, Swanson, Dyer, Gorlin, and Mogford.\n\n 109. The 2017 10-K discussed risks related to PolarityTE\u2019s intellectual property, stating,\nin relevant part:\n\n Our success depends significantly on our ability to protect our proprietary rights\n in technologies that presently consist of trade secrets and patent applications. We\n currently have no issued patents relating to any of our product candidates. We\n intend to expand our patenting activities and rely on patent protection, as well as a\n combination of copyright, trade secret and trademark laws and nondisclosure,\n confidentiality and other contractual restrictions to protect our proprietary\n technology, and there can be no assurance these methods of protection will be\n effective. These legal means afford only limited protection and may not adequately\n protect our rights or permit us to gain or keep any competitive advantage. In\n addition, our presently pending patent applications include claims to material\n aspects of our activities that are not currently protected by issued patents. The\n patent application process can be time consuming and expensive. We cannot ensure\n that any of the pending patent applications we acquire, have acquired, or may file\n will result in issued patents. Competitors may be able to design around our patents\n or develop procedures that provide outcomes that are comparable or even superior\n to ours.\n\n ***\n\n The failure to obtain and maintain patents and/or protect our intellectual property\n rights could have a material and adverse effect on our business, results of\n operations, and financial condition. We cannot be certain that, if challenged, any\n patents we ultimately obtain would be upheld because a determination of the\n validity and enforceability of a patent involves complex issues of fact and law. If\n one or more of any patents we obtain is invalidated and/or held unenforceable, such\n an outcome could reduce or eliminate any competitive advantage we might\n otherwise have had.\n\n(Emphasis added.)\n\n\n\n\n 32\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 33 of 56\n\n\n\n\n 110. Attached to the 2017 10-K were certifications pursuant to Rule 13a-14(a) and 15d-\n14(a) under the Exchange Act and the Sarbanes-Oxley Act of 2002 (\u201cSOX\u201d) signed by Defendants\n\nLough and Stetson attesting to the accuracy of the 2017 10-K.\n\n Q1 208 10-Q\n\n 111. On March 19, 2018, the Company filed its quarterly report on Form 10-Q with the\nSEC for the fiscal quarter ended January 31, 2018 (the \u201cQ1 2018 10-Q\u201d), signed by Defendants\n\nLough, and Stetson.\n\n 112. Regarding the Company\u2019s intellectual property, the Q1 2018 10-Q stated, in\nrelevant part:\n\n Our success depends significantly on our ability to protect our proprietary rights\n in technologies that presently consist of trade secrets and patent applications. We\n currently have no issued patents relating to any of our product candidates. We\n intend to expand our patenting activities and rely on patent protection, as well as a\n combination of copyright, trade secret and trademark laws and nondisclosure,\n confidentiality and other contractual restrictions to protect our proprietary\n technology, and there can be no assurance these methods of protection will be\n effective. These legal means afford only limited protection and may not adequately\n protect our rights or permit us to gain or keep any competitive advantage. In\n addition, our presently pending patent applications include claims to material\n aspects of our activities that are not currently protected by issued patents. The\n patent application process can be time consuming and expensive. We cannot ensure\n that any of the pending patent applications we acquire, have acquired, or may file\n will result in issued patents. Competitors may be able to design around our patents\n or develop procedures that provide outcomes that are comparable or even superior\n to ours. We also cannot assure you that the inventors of the patents and applications\n that we expect to own or license were the first-to-invent or the first-inventor-to-file\n on the inventions, or that a third party will not claim ownership in one of our patents\n or patent applications. We cannot assure you that a third party does not have or will\n not obtain patents that could preclude us from practicing the patents we own or\n license now or in the future.\n\n The failure to obtain and maintain patents and/or protect our intellectual property\n rights could have a material and adverse effect on our business, results of\n operations, and financial condition. We cannot be certain that, if challenged, any\n patents we ultimately obtain would be upheld because a determination of the\n validity and enforceability of a patent involves complex issues of fact and law. If\n one or more of any patents we obtain is invalidated and/or held unenforceable, such\n\n 33\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 34 of 56\n\n\n\n\n an outcome could reduce or eliminate any competitive advantage we might\n otherwise have had.\n\n(Emphasis added.)\n\n 113. Attached to the Q1 2018 10-Q were SOX certifications signed by Defendants\nLough and Stetson, attesting to the accuracy of the Q1 2018 10-Q.\n\n May 29, 2018 Registration Statement\n\n 114. On May 29, 2018, the Company filed a S-8 Registration Statement (the \u201cS-8\nStatement\u201d) with the SEC, signed by Defendants Lough, Stetson, Swanson, Beeghley, Dyer,\n\nBogan, Gorlin, and Mogford and dated May 28, 2018. The S-8 statement incorporated by reference\n\nthe 2017 10-K, among other documents. Defendants Lough, Swanson, Dyer, Gorlin, Mogford, and\n\nStetson were all among the selling stockholders listed in the S-8 Statement.\n\n June 18, 2018 Press Release\n\n 115. On June 18, 2018 the Individual Defendants caused the Company to issue a press\nrelease titled \u201cPolarityTE Provides Corporate Update on Company Progress.\u201d Regarding the\n\nCompany\u2019s patents, the press release stated, in relevant part:\n\n Twelve of the Company\u2019s U.S. trademark applications have been allowed and the\n Company is now in the active prosecution phase with all three of its U.S. non-\n provisional patent applications: U.S. Application No. 14/954,335 published as\n US 2016/0151540; U.S. Application No. 15/650,656 published as US\n 2018/0154043; and U.S. Application No. 15/650,659 published as US\n 2018/0154044. The Company continues to actively file patent and trademark\n applications to protect its intellectual property and build out its patent portfolio as\n it relates to core cell-tissue biotechnologies and advanced related technology\n derivates (RTDs).\n\n(Emphasis added.)\n\n Form 8-Ks\n\n\n\n\n 34\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 35 of 56\n\n\n\n\n 116. Between March 31, 2017 and June 22, 2018, the Individual Defendants caused the\nCompany to file approximately 30 Form 8-Ks with the SEC. These filings provided promotional\n\npresentations about the Company and updates on pre-clinical trials, inter alia. However, none of\n\nthese filings disclosed either the USPTO\u2019s non-final or final rejections of the patent.\n\n 117. The statements referenced in \u00b6\u00b6 96, 97, 99, 100 and 106-116 above were materially\nfalse and misleading and failed to disclose material facts necessary to make the statements made\n\nnot false and misleading. Specifically, the Individual Defendants failed to disclose that: (1) the\n\nPatent received a non-final notice of rejection on May 31, 2017, prior to the closing of the Merger;\n\n(2) the commercial viability of the Company was overstated in light of the USPTO\u2019s rejection of\n\nthe patent application; (3) the Company failed to maintain internal controls; and (4) due to the\n\nforegoing, Defendants\u2019 statements regarding the Company\u2019s business, operations, and prospects\n\nwere materially false, misleading, and lacked a reasonable basis in fact at all relevant times.\n\nStatements referenced in \u00b6\u00b6 115 and 116 were also false and misleading because they failed to\n\ndisclose that a final rejection was assigned to the Patent on June 4, 2018.\n\n The Truth Emerges\n\n Citron Research Report\n\n 118. Citron Research published a report on June 25, 2018, revealing rejections of the\nPatent by the USPTO.\n\n 119. According to the Citron Research report, and as confirmed by the USPTO\u2019s\nwebsite, the USPTO issued a non-final rejection of the Patent on March 31, 2017, and a final\n\nrejection of the Patent on June 4, 2018.\n\n\n\n\n 35\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 36 of 56\n\n\n\n\n 120. On this news, the price per share of PolarityTE stock fell $10.59, or 27%, from the\nprevious day\u2019s trading price, closing at $28.14 on June 25, 2018. The price of PolarityTE\u2019s stock\n\ncontinued to drop the following day, closing at $26.41 on June 26, 2018.\n\n False and Misleading Statements Continue\n\n 121. On June 27, 2018, the Individual Defendants caused the Company to issue a press\nrelease titled \u201cPolarityTE Provides Update on Key Opinion Leader Event and Addresses\n\nMisleading Report.\u201d Regarding the Company\u2019s intellectual property, the press release stated, in\n\nrelevant part:\n\n Regarding online statements about a \u201cnon-final rejection\u201d and a \u201cfinal rejection\u201d\n notice from the USPTO, the Company notes that such statements refer to the receipt\n of office actions from the USPTO. Office actions are part of the normal patent\n prosecution process, and are received on the \u201cnotification date\u201d identified on each\n office action. The Company is actively pursuing a variety of claims within multiple\n published non-provisional patent applications in the U.S. The prosecution dialogue\n between an applicant and the USPTO commonly includes a series of office actions\n as well as the applicant\u2019s responses to such office actions. It is common for a first\n office action to be referred to as a \u201cnon-final rejection,\u201d and for a second office\n action to be referred to as a \u201cfinal rejection.\u201d Importantly, however, in each such\n instance the applicant has the opportunity to respond to the USPTO, as well as to\n continue prosecution thereafter. The Company recently received a second office\n action on one published patent application and is moving forward with a timely\n response. The process of patent prosecution before the USPTO can be lengthy.\n However, the Company does not feel that lack of issued patents should deprive\n patients of the very real potential benefits they can receive from our products in the\n interim.\n\n 122. The press release continued, stating:\n Material Information about the Company\u2019s intellectual property and risks related\n to obtaining patent protection are disclosed in our SEC filings and reports. The\n Company has highlighted repeatedly throughout our SEC filings and reports that\n we have applied for patent protection, that we do not own any issued patents on our\n technology, and that we rely on protecting our processes and technologies by\n seeking patent protection as well as by maintaining certain aspects as trade secrets.\n Our objective is to build a portfolio of patents, in conjunction with the continued\n protection of our trade secrets and know-how, in order to further protect our\n regenerative medicine platform and derivative technologies, as well as the\n manufacturing and deployment processes of those technologies. [Emphasis added.]\n\n 36\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 37 of 56\n\n\n\n\n 123. Regarding the Company\u2019s S-8 Statement, the June 27, 2018 press release stated, in\nrelevant part:\n\n The Company strongly disputes any claim that any current directors or officers have\n sold shares of the Company\u2019s stock in the last 12 months. These contentions are a\n mischaracterization of basic SEC registration practice. Registration of the securities\n issuable under an incentive stock plan is a routine event and does not equate to a\n sale of shares. The Company filed a registration statement on Form S-8 with the\n SEC on May 29, 2018, which covers shares and options granted to its current and\n former employees and directors under the Company\u2019s incentive stock plan. The\n filing of a Form S-8 is a customary practice for publicly-held companies. None of\n the current officers and directors of the Company have sold shares. As is well\n known, directors, officers, and certain other insiders or affiliates are generally\n required to publicly report such sales within two days of sale. In addition, as the\n Company previously reported, its officers and directors continue to be subject to\n lock-up agreements that prohibit them from selling any shares until September\n 2018.\n\n 124. On July 25, 2018, the Individual Defendants caused the Company to issue a press\nrelease providing a \u201cCommercial Update.\u201d The press release stated, in relevant part:\n\n Despite the success observed with the initial roll out of SkinTE, there have been\n unsubstantiated rumors regarding the company and its lead product, SkinTE, by\n short sellers and competitors. While the company does not ordinarily comment on\n rumors and speculation, when these rumors start to affect SkinTE patients, their\n families, and their caregivers, we feel obligated to correct such misinformation.\n Individuals and/or groups on certain social media websites have recently engaged\n in deplorable attacks directed towards SkinTE patients and caregivers, and the\n Company condemns such disgusting and unacceptable bullying.\n\n The Company is not a \u201cfraud,\u201d as known short sellers have claimed recently, and\n will not let these misrepresentations affect patients whose lives are at risk. There\n are many examples of patients whose lives have been positively affected by\n SkinTE, several of which were presented during the June 25, 2018 KOL summit in\n New York City.\n\n 125. The statements referenced in \u00b6\u00b6 121-124 above were materially false and\nmisleading and failed to disclose material facts necessary to make the statements made not false\n\nand misleading. Specifically, the Individual Defendants failed to disclose that: (1) the commercial\n\nviability of the Company was overstated in light of the USPTO\u2019s rejection of the patent\n\n\n 37\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 38 of 56\n\n\n\n\napplication; (2) the Company failed to maintain internal controls; and (3) due to the foregoing,\n\nDefendants\u2019 statements regarding the Company\u2019s business, operations, and prospects were\n\nmaterially false, misleading, and lacked a reasonable basis in fact at all relevant times.\n\n 126. In breach of their fiduciary duties, the Individual Defendants willfully or recklessly\ncaused or permitted the Company to make the false and misleading statements and omissions of\n\nmaterial fact to the investing public as set forth above.\n\n 127. Moreover, the Individual Defendants failed to correct and caused the Company to\nfail to correct the false and misleading statements and omissions of material fact referenced herein,\n\nrendering them personally liable to the Company for breaching their fiduciary duties.\n\n 128. In further breach of their fiduciary duties, the Individual Defendants failed to\nmaintain internal controls.\n\n DAMAGES TO POLARITYTE\n\n 129. As a direct and proximate result of the Individual Defendants\u2019 conduct, PolarityTE\nwill lose and expend many millions of dollars.\n\n 130. Such expenditures include, but are not limited to, legal fees associated with the\nSecurities Class Actions filed against the Company, its CEO, CSO and Chairman as well as a\n\nmember of its Board of Directors, any internal investigations, and amounts paid to outside lawyers,\n\naccountants, and investigators in connection thereto.\n\n 131. As a direct and proximate result of the Individual Defendants\u2019 conduct, PolarityTE\nhas also suffered and will continue to suffer a loss of reputation and goodwill, and a \u201cliar\u2019s\n\ndiscount\u201d that will plague the Company\u2019s stock in the future due to the Company\u2019s and their\n\nmisrepresentations and the Individual Defendants\u2019 breaches of fiduciary duties and unjust\n\nenrichment.\n\n 38\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 39 of 56\n\n\n\n\n DERIVATIVE ALLEGATIONS\n\n 132. Plaintiff brings this action derivatively and for the benefit of PolarityTE to redress\ninjuries suffered, and to be suffered, as a result of the Individual Defendants\u2019 breaches of their\n\nfiduciary duties as directors and/or officers of PolarityTE, unjust enrichment, and violations of\n\nSection 14(a) of the Exchange Act, as well as the aiding and abetting thereof.\n\n 133. PolarityTE is named solely as a nominal party in this action. This is not a collusive\naction to confer jurisdiction on this Court that it would not otherwise have.\n\n 134. Plaintiff is, and has been at all relevant times, a shareholder of PolarityTE. Plaintiff\nwill adequately and fairly represent the interests of PolarityTE in enforcing and prosecuting its\n\nrights, and, to that end, has retained competent counsel, experienced in derivative litigation, to\n\nenforce and prosecute this action.\n\n DEMAND FUTILITY ALLEGATIONS\n\n 135. Plaintiff incorporates by reference and re-alleges each and every allegation stated\nabove as if fully set forth herein.\n\n 136. A pre-suit demand on the Board of PolarityTE is futile and, therefore, excused. At\nthe time of filing of this action, the Board consists of the following eight individuals: Defendants\n\nLough, Bogan, Dyer, Gorlin, and Mogford (the \u201cDirector-Defendants\u201d) and non-parties Peter A.\n\nCohen, Rainer Erdtmann, and David Seaburg (collectively, with the Director-Defendants, the\n\n\u201cDirectors\u201d). Plaintiff needs only to allege demand futility as to four of the eight Directors who\n\nare on the Board at the time this action is commenced.\n\n 137. Demand is excused as to all of the Director-Defendants because each one of them\nfaces, individually and collectively, a substantial likelihood of liability as a result of the scheme\n\nthey engaged in knowingly or recklessly to make and/or cause the Company to make false and\n\n 39\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 40 of 56\n\n\n\n\nmisleading statements and omissions of material facts, which renders them unable to impartially\n\ninvestigate the charges and decide whether to pursue action against themselves and the other\n\nperpetrators of the scheme.\n\n 138. In complete abdication of their fiduciary duties, the Director-Defendants either\nknowingly or recklessly participated in making and/or causing the Company to make the materially\n\nfalse and misleading statements alleged herein. The fraudulent scheme was intended to make the\n\nCompany appear more profitable and attractive to investors. As a result of the foregoing, the\n\nDirectors breached their fiduciary duties, face a substantial likelihood of liability, are not\n\ndisinterested, and demand upon them is futile, and thus excused.\n\n 139. The Director-Defendants knew of the falsity of the misleading statements at the\ntime they were made. The development and commercialization of regenerative medicine\n\ntechnologies based on the Patent is the core operation of PolarityTE. The Patent is highly material\n\nto the Company\u2019s core operations: it was the only asset acquired through the Merger and the\n\ntechnology underpins all of the Company\u2019s potential products.\n\n 140. As Board members of PolarityTE, charged with overseeing the Company\u2019s affairs,\nDirector-Defendants Lough, Bogan, Dyer, Gorlin, and Mogford all must have had knowledge of\n\ninformation pertaining to the Company\u2019s core operations and the material events giving rise to\n\nthese claims. Specifically, as Board members of PolarityTE, Defendants Lough, Bogan, Dyer,\n\nGorlin, and Mogford must have been aware of the material facts surrounding the Patent described\n\nherein, including USPTO\u2019s non-final and final rejections of the Patent.\n\n 141. This inference of actual knowledge of the falsity of the misleading statements and\nomissions at issue is further supported by representations on the Company\u2019s website that\n\nDefendant Lough \u201cis experienced with IP and patent evolution, investment strategy, regulatory\n\n\n 40\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 41 of 56\n\n\n\n\npathway systems, CLIA/ GLP manufacturing platforms, legal due diligence and business\n\ndevelopment.\u201d\n\n 142. Therefore, Director-Defendants Lough, Bogan, Dyer, Gorlin, and Mogford each\nknew of the falsity of the statements and misleading omissions detailed herein at the time such\n\nstatements were made, and further failed to exercise or recklessly disregarded their duty of\n\noversight to stop or correct such misleading statements and omissions.\n\n 143. Additional reasons that demand on Defendant Lough is futile follow. Defendant\nLough has served as a Company director since December 2016 and serves as Chairman of the\n\nBoard. He also serves as the Company\u2019s CEO and CSO, and is thus, as the Company admits, a\n\nnon-independent director. He receives handsome compensation, including $2,536,250 in the fiscal\n\nyear ended October 31, 2017. His base compensation was further raised as of November 17, 2017.\n\nHis large Company stock holding, representing a 36.3% ownership of the Company, reveals his\n\ncontrol over the other Directors and the Company. As Chairman of the Board, CEO, and CSO he\n\nconducted little, if any, oversight of the Company\u2019s engagement in the scheme to make false and\n\nmisleading statements, consciously disregarded his duties to monitor such controls over reporting\n\nand engagement in the scheme, and consciously disregarded his duties to protect corporate assets.\n\nMoreover, Defendant Lough signed, and thus personally made the false and misleading statements\n\nin, the 2017 10-K and S-8 Statement referenced herein, in addition to falsely representing that the\n\nCompany possesses patents for its technology in multiple interviews. Furthermore, Defendant\n\nLough is a defendant in the Securities Class Actions. For these reasons, too, Defendant Lough\n\nbreached his fiduciary duties, faces a substantial likelihood of liability, is not independent or\n\ndisinterested, and thus demand upon him is futile and, therefore, excused.\n\n\n\n\n 41\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 42 of 56\n\n\n\n\n 144. Additional reasons that demand on Defendant Dyer is futile follow. Defendant Dyer\nhas served as a Company director since March 2, 2017, and serves as Chair of the Audit\n\nCommittee. He receives handsome compensation, including $292,699 in the fiscal year ended\n\nOctober 31, 2017. As a trusted Company director and Chair of the Audit Committee, he conducted\n\nlittle, if any, oversight of the Company\u2019s engagement in the scheme to make false and misleading\n\nstatements, consciously disregarded his duties to monitor such controls over reporting and\n\nengagement in the scheme, and consciously disregarded his duties to protect corporate assets.\n\nMoreover, Defendant Dyer signed, and thus personally made the false and misleading statements\n\nin, the 2017 10-K and S-8 Statement referenced herein. He also personally contributed to the false\n\nand misleading Forbes article published on August 8, 2017. Furthermore, Defendant Dyer is a\n\ndefendant in the Securities Class Actions. For these reasons, too, Defendant Dyer breached his\n\nfiduciary duties, faces a substantial likelihood of liability, is not independent or disinterested, and\n\nthus demand upon him is futile and, therefore, excused.\n\n 145. Additional reasons that demand on Defendant Gorlin is futile follow. Defendant\nGorlin has served as a Company director since February 2017 and serves as a member of the Audit\n\nCommittee. He receives handsome compensation, including $400,688 in the fiscal year ended\n\nOctober 31, 2017. As a member of the Audit Committee and as a trusted Company director, he\n\nconducted little, if any, oversight of the Company\u2019s engagement in the scheme to make false and\n\nmisleading statements, consciously disregarded his duties to monitor such controls over reporting\n\nand engagement in the scheme, and consciously disregarded his duties to protect corporate assets.\n\nMoreover, Defendant Gorlin signed, and thus personally made the false and misleading statements\n\nin, the 2017 10-K and S-8 Statement referenced herein. For these reasons, too, Defendant Gorlin\n\n\n\n\n 42\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 43 of 56\n\n\n\n\nbreached his fiduciary duties, faces a substantial likelihood of liability, is not independent or\n\ndisinterested, and thus demand upon him is futile and, therefore, excused.\n\n 146. Additional reasons that demand on Defendant Mogford is futile follow. Defendant\nMogford has served as a Company director since February 2017. He receives handsome\n\ncompensation, including $400,688 in the fiscal year ended October 31, 2017. As a trusted\n\nCompany director, he conducted little, if any, oversight of the Company\u2019s engagement in the\n\nscheme to make false and misleading statements, consciously disregarded his duties to monitor\n\nsuch controls over reporting and engagement in the scheme, and consciously disregarded his duties\n\nto protect corporate assets. Moreover, Defendant Mogford signed, and thus personally made the\n\nfalse and misleading statements in, the 2017 10-K referenced herein. For these reasons, too,\n\nDefendant Mogford breached his fiduciary duties, faces a substantial likelihood of liability, is not\n\nindependent or disinterested, and thus demand upon him is futile and, therefore, excused.\n\n 147. Additional reasons that demand on Defendant Bogan is futile follow. Defendant\nBogan has served as a Company director since April 2018. As a trusted Company director and an\n\nexperienced business and securities attorney with extensive corporate governance experience, he\n\nconducted little, if any, oversight of the Company\u2019s engagement in the scheme to make false and\n\nmisleading statements, consciously disregarded his duties to monitor such controls over reporting\n\nand engagement in the scheme, and consciously disregarded his duties to protect corporate assets\n\nfrom the time that he joined the Board in April 2018. Moreover, Defendant Bogan signed, and thus\n\npersonally made the false and misleading statements in, the S-8 Statement referenced herein. For\n\nthese reasons, too, Defendant Bogan breached his fiduciary duties, faces a substantial likelihood\n\nof liability, is not independent or disinterested, and thus demand upon him is futile and, therefore,\n\nexcused.\n\n\n 43\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 44 of 56\n\n\n\n\n 148. Additional reasons that demand on non-party David Seaburg (\u201cSeaburg\u201d) is futile\nfollow. Seaburg has served as a Company director since August 2018. Subsequent to his election\n\nto the Board, Seaburg and the Company entered into a written consulting agreement \u201cpursuant to\n\nwhich [Seaburg] will provide investor relations and other services to the Company over a period\n\nof two years for a fee consisting of (i) quarter-annual cash payment of $10,000, (ii) 60,000\n\nrestricted stock units issued under the Company equity incentive plan that vest in four equal\n\ninstallments every six months during the term of the agreement subject to continued service, and\n\n(iii) an annual award under the Company equity incentive plan of options exercisable over a term\n\nof 10 years to purchase common stock in number equal to the number of shares of common stock\n\nwith a value of $150,000 at the time of the award based on a Black-Scholes calculation.\u201d Thus, as\n\nthe Company admits, Seaburg is a non-independent director. For these reasons, too, Seaburg is not\n\nindependent, and thus demand upon him is futile and, therefore, excused.\n\n 149. Additional reasons that demand on the Board is futile follow.\n\n 150. Demand in this case is excused because the Directors are beholden to and controlled\nby Director-Defendant Lough, who controls the Company by virtue of his share ownership,\n\nrepresenting 36.3% of the Company\u2019s outstanding common stock as of August 9, 2018. These\n\nshareholdings provide Director-Defendant Lough with significant control over the continued\n\nemployment of the remaining Directors, especially Seaburg, who is party to a consulting\n\nagreement with the Company. All of the Directors are also beholden to Director-Defendant Lough\n\nbecause of the handsome compensation they receive as Directors\u2014on November 10, 2017, the\n\nCompany approved a new Director Compensation Policy, under which non-employee directors\n\nare entitled to increased fees and stock options. 16 Thus, the Directors are unable to evaluate a\n\n\n16 As reported in the 2018 Proxy Statement:\n\n 44\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 45 of 56\n\n\n\n\nDuring the fiscal year ended October 31, 2017, our directors were compensated in\naccordance with the following terms. Each non-employee director received an\nannual cash retainer of $5,000, other than the Chair of the Company\u2019s Audit\nCommittee, who received $6,000. In addition, the Chairman of the Board of\nDirectors received an additional annual cash retainer of $10,000.\n\nEach non-employee director was also entitled to receive 5-year options to purchase\nshares of the Company\u2019s Common Stock valued at $10,000, calculated by dividing\n$10,000 by the closing stock price on the date the award was granted. The options\nvest in full six months after the grant date, provided the applicable director is still\nserving on the Board of Directors.\n\nEach non-employee director was entitled to a fee of $2,500 for each Board meeting\nat which the director was present in person, and each member of our Board\ncommittees was entitled to a fee of $800 for each committee meeting at which the\ndirector was present in person. Each non-employee director was entitled to a fee of\n$300 for each teleconference called by either the Chairman of the Board of\nDirectors, the President of the Company or the Chairman of a Board committee.\n\nOn November 10, 2017, the Board of Directors approved a new Director\nCompensation Policy. At this time our non-employee directors participating under\nthe Director Compensation Policy are Steve Gorlin, Jon Mogford, Jeff Dyer, Willie\nC. Bogan, Peter A. Cohen, and Rainer Erdtmann. Under the new policy, our\ndirectors will be compensated in accordance with the following terms.\n\n \u2022 Each non-employee director receives a quarterly cash retainer of $10,000.\n The Company\u2019s Audit Committee Chairman receives a $15,000 annual\n Service Fee, the Compensation Committee Chairman receives a $10,000\n annual service fee, and the Nominating and Corporate Governance\n Committee Chairman receives an $8,000 annual service fee.\n\n \u2022 Each non-employee director is entitled to receive 10-year options under the\n Company equity incentive plan to purchase that number of shares of the\n Company\u2019s Common Stock valued at $150,000, calculated by dividing\n $150,000 by the Black-Scholes value of the stock options based on the\n closing stock price the day the stock options are awarded.\n\n \u2022 Each non-employee director is entitled to a fee of $1,500 for each Board of\n Directors meeting at which the director is present in person, and each\n member of our Board committees is entitled to a fee of $800 for each\n committee meeting at which the director is present in person. Each non-\n employee director is entitled to a fee of $500 for each teleconference called\n by either the Chairman of the Board of Directors, the President of the\n Company or the Chairman of a Board of Directors committee.\n\n 45\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 46 of 56\n\n\n\n\ndemand with disinterest or independence as a result of Director-Defendant Lough\u2019s control over\n\nthem and his substantial likelihood of liability in the Securities Class Actions and in the present\n\naction, and demand is excused as to all of the directors.\n\n 151. The Directors have longstanding business and personal relationships with each\nother and the Individual Defendants that preclude them from acting independently and in the best\n\ninterests of the Company and the shareholders. These conflicts of interest precluded the Directors\n\nfrom adequately monitoring the Company\u2019s operations and internal controls and calling into\n\nquestion the Individual Defendants\u2019 conduct. Thus, demand upon the Directors would be futile.\n\n 152. For example:\n (a) As the Company admits, Defendants Lough and Dyer are related by marriage.\n\n (b) Defendant Gorlin is the Principal and Founder of Gorlin Companies. Defendant\n\n Mogford is the CEO and past Vice Chancellor of Research at Gorlin Companies.\n\n (c) Defendants Gorlin and Mogford have also served together on the board of Medovex\n\n Corp. Defendant Gorlin previously served as the Co-Chairman of the board of Medovex Corp.\n\n and Defendant Gorlin\u2019s son, Jarrett Gorlin, is currently the CEO and a director of Medovex\n\n Corp. Defendant Mogford remains on the board of Medovex Corp.\n\nThese personal and professional connections, combined with the substantial likelihood of liability\n\nthat Defendant Lough faces in the Securities Class Action and that Defendants Lough, Dyer,\n\nGorlin, and Mogford face in the instant action, prevent Defendants Lough, Dyer, Gorlin, and\n\nMogford from evaluating a demand with independence or disinterest.\n\n 153. All of the Director-Defendants breached the duty of candor by making, or causing\nthe Company to make, false and misleading statements regarding the Company\u2019s business,\n\noperations, and prospects, despite having knowledge of the falsity of those statements. The\n\n\n 46\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 47 of 56\n\n\n\n\nDirector-Defendants may not be indemnified for breaching the duty of candor. As a result, all of\n\nthe Director-Defendants face a substantial likelihood of liability and cannot evaluate a demand\n\nwith disinterest. Therefore, demand is futile, and thus, excused.\n\n 154. In violation of the Code of Conduct, the Director-Defendants conducted little, if\nany, oversight of the Company\u2019s engagement in the Individual Defendants\u2019 scheme to issue\n\nmaterially false and misleading statements to the public and to facilitate and disguise the Individual\n\nDefendants\u2019 violations of law, including breaches of fiduciary duty, unjust enrichment, and\n\nviolations of Section 14(a) of the Exchange Act. In further violation of the Code of Conduct, the\n\nDirector-Defendants failed to comply with laws and regulations, maintain the accuracy of\n\nCompany records and reports, conduct business in an honest and ethical manner, and properly\n\nreport violations of the Code of Conduct. Thus, the Director-Defendants face a substantial\n\nlikelihood of liability and demand is futile as to them.\n\n 155. PolarityTE has been and will continue to be exposed to significant losses due to the\nwrongdoing complained of herein, yet the Directors have not filed any lawsuits against themselves\n\nor others who were responsible for that wrongful conduct to attempt to recover for PolarityTE any\n\npart of the damages PolarityTE suffered and will continue to suffer thereby. Thus, any demand\n\nupon the Directors would be futile.\n\n 156. The Individual Defendants\u2019 conduct described herein and summarized above could\nnot have been the product of legitimate business judgment as it was based on bad faith and\n\nintentional, reckless, or disloyal misconduct. Thus, none of the Director-Defendants can claim\n\nexculpation from their violations of duty pursuant to the Company\u2019s charter (to the extent such a\n\nprovision exists). As a majority of the Directors face a substantial likelihood of liability, they are\n\nself-interested in the transactions challenged herein and cannot be presumed to be capable of\n\n\n 47\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 48 of 56\n\n\n\n\nexercising independent and disinterested judgment about whether to pursue this action on behalf\n\nof the shareholders of the Company. Accordingly, demand is excused as being futile.\n\n 157. The acts complained of herein constitute violations of fiduciary duties owed by\nPolarityTE\u2019s officers and directors, and these acts are incapable of ratification.\n\n 158. The Director-Defendants may also be protected against personal liability for their\nbreaches of fiduciary duty alleged herein by directors\u2019 and officers\u2019 liability insurance if they\n\ncaused the Company to purchase it for their protection with corporate funds, i.e., monies belonging\n\nto the stockholders of PolarityTE. If there is a directors\u2019 and officers\u2019 liability insurance policy\n\ncovering the Directors, it may contain provisions that eliminate coverage for any action brought\n\ndirectly by the Company against the Director-Defendants, known as, inter alia, the \u201cinsured-\n\nversus-insured exclusion.\u201d As a result, if the Director-Defendants were to sue themselves or certain\n\nof the officers of PolarityTE, there would be no directors\u2019 and officers\u2019 insurance protection.\n\nAccordingly, the Directors cannot be expected to bring such a suit. On the other hand, if the suit\n\nis brought derivatively, as this action is brought, such insurance coverage, if such an insurance\n\npolicy exists, will provide a basis for the Company to effectuate a recovery. Thus, demand on the\n\nDirectors is futile and, therefore, excused.\n\n 159. If there is no directors\u2019 and officers\u2019 liability insurance, then the Directors will not\ncause PolarityTE to sue the Individual Defendants named herein, since, if they did, they would\n\nface a large uninsured individual liability. Accordingly, demand is futile in that event, as well.\n\n 160. Thus, for all of the reasons set forth above, all of the Directors, and, if not all of\nthem, at least four of the Directors, cannot consider a demand with disinterestedness and\n\nindependence. Consequently, a demand upon the Board is excused as futile.\n\n\n\n\n 48\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 49 of 56\n\n\n\n\n FIRST CLAIM\n\n Against Individual Defendants for Violations of\n Section 14(a) of the Securities Exchange Act of 1934\n\n 161. Plaintiff incorporates by reference and re-alleges each and every allegation set forth\nabove, as though fully set forth herein.\n\n 162. The Section 14(a) Exchange Act claims alleged herein are based solely on\nnegligence. They are not based on any allegation of reckless or knowing conduct by or on behalf\n\nof the Individual Defendants. The Section 14(a) Exchange Act claims alleged herein do not allege\n\nand do not sound in fraud. Plaintiff specifically disclaims any allegations of, reliance upon any\n\nallegation of, or reference to any allegation of fraud, scienter, or recklessness with regard to the\n\nnonfraud claims.\n\n 163. Section 14(a) of the Exchange Act, 15 U.S.C. \u00a7 78n(a)(1), provides that \u201c[i]t shall\nbe unlawful for any person, by use of the mails or by any means or instrumentality of interstate\n\ncommerce or of any facility of a national securities exchange or otherwise, in contravention of\n\nsuch rules and regulations as the [SEC] may prescribe as necessary or appropriate in the public\n\ninterest or for the protection of investors, to solicit or to permit the use of his name to solicit any\n\nproxy or consent or authorization in respect of any security (other than an exempted security)\n\nregistered pursuant to section 12 of this title [15 U.S.C. \u00a7 78l].\u201d\n\n 164. Rule 14a-9, promulgated pursuant to \u00a7 14(a) of the Exchange Act, provides that no\nproxy statement shall contain \u201cany statement which, at the time and in the light of the\n\ncircumstances under which it is made, is false or misleading with respect to any material fact, or\n\nwhich omits to state any material fact necessary in order to make the statements therein not false\n\nor misleading.\u201d 17 C.F.R. \u00a7 240.14a-9.\n\n\n\n 49\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 50 of 56\n\n\n\n\n 165. Under the direction and watch of the Directors, the 2017 Proxy Statement failed to\ndisclose that: (1) the Patent received a non-final notice of rejection on May 31, 2017, prior to the\n\nclosing of the Merger; (2) the commercial viability of the Company was overstated in light of the\n\nUSPTO\u2019s rejection of the patent application; (3) the Company failed to maintain internal controls;\n\nand (4) due to the foregoing, Defendants\u2019 statements regarding the Company\u2019s business,\n\noperations, and prospects were materially false, misleading, and lacked a reasonable basis in fact\n\nat all relevant times.\n\n 166. Moreover, the 2017 Proxy Statement was false and misleading in discussing the\nCompany\u2019s adherence to specific governance policies and procedures, including the Code of\n\nConduct, due to the Individual Defendants\u2019 failure to abide by them and to their making and or\n\npermitting the Company to make the false and misleading statements and omissions of material\n\nfact referenced herein.\n\n 167. In the exercise of reasonable care, the Individual Defendants should have known\nthat by misrepresenting or failing to disclose the foregoing material facts, the statements contained\n\nin the 2017 Proxy Statement were materially false and misleading. The misrepresentations and\n\nomissions were material to Plaintiff in voting on the matters set forth for shareholder determination\n\nin the 2017 Proxy Statement, including election of directors, an advisory vote on executive\n\ncompensation (\u201cSay-on-Pay\u201d) and ratification of the appointment of an independent registered\n\npublic accounting firm.\n\n 168. The false and misleading elements of the 2017 Proxy Statement led to the re-\nelection of Defendants Lough, Swanson, and Stetson, which allowed them to continue breaching\n\ntheir fiduciary duties to PolarityTE.\n\n\n\n\n 50\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 51 of 56\n\n\n\n\n 169. The Company was damaged as a result of the Individual Defendants\u2019 material\nmisrepresentations and omissions in the 2017 Proxy Statement.\n\n 170. Plaintiff on behalf of PolarityTE has no adequate remedy at law.\n SECOND CLAIM\n\n Against the Individual Defendants for Breach of Fiduciary Duties\n\n 171. Plaintiff incorporates by reference and re-alleges each and every allegation set forth\nabove, as though fully set forth herein.\n\n 172. Each Individual Defendant owed to the Company the duty to exercise candor, good\nfaith, and loyalty in the management and administration of PolarityTE\u2019s business and affairs.\n\n 173. Each of the Individual Defendants violated and breached his or her fiduciary duties\nof candor, good faith, loyalty, reasonable inquiry, oversight, and supervision.\n\n 174. The Individual Defendants\u2019 conduct set forth herein was due to their intentional or\nreckless breach of the fiduciary duties they owed to the Company, as alleged herein. The Individual\n\nDefendants intentionally or recklessly breached or disregarded their fiduciary duties to protect the\n\nrights and interests of PolarityTE.\n\n 175. In breach of their fiduciary duties, the Individual Defendants failed to maintain\ninternal controls.\n\n 176. In further breach of their fiduciary duties owed to PolarityTE, the Individual\nDefendants willfully or recklessly made and/or caused the Company to make false and misleading\n\nstatements and omissions of material fact that failed to disclose that: (1) the Patent received a non-\n\nfinal notice of rejection on May 31, 2017, prior to the closing of the Merger; (2) a final rejection\n\nwas assigned to the Patent on June 4, 2018; (3) the commercial viability of the Company was\n\noverstated in light of the USPTO\u2019s rejection of the patent application; (4) the Company failed to\n\n 51\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 52 of 56\n\n\n\n\nmaintain internal controls; and (5) due to the foregoing, Defendants\u2019 statements regarding the\n\nCompany\u2019s business, operations, and prospects were materially false, misleading, and lacked a\n\nreasonable basis in fact at all relevant times.\n\n 177. The Individual Defendants also failed to correct and caused the Company to fail to\ncorrect the false and misleading statements and omissions of material fact, rendering them\n\npersonally liable to the Company for breaching their fiduciary duties.\n\n 178. The Individual Defendants had actual or constructive knowledge that the Company\nissued materially false and misleading statements, and they failed to correct the Company\u2019s public\n\nstatements and representations. The Individual Defendants had actual knowledge of the\n\nmisrepresentations and omissions of material facts set forth herein, or acted with reckless disregard\n\nfor the truth, in that they failed to ascertain and to disclose such facts, even though such facts were\n\navailable to them. Such material misrepresentations and omissions were committed knowingly or\n\nrecklessly and for the purpose and effect of artificially inflating the price of PolarityTE\u2019s securities.\n\n 179. The Individual Defendants had actual or constructive knowledge that they had\ncaused the Company to improperly engage in the fraudulent schemes set forth herein and to fail to\n\nmaintain internal controls. The Individual Defendants had actual knowledge that the Company was\n\nengaging in the fraudulent schemes set forth herein, and that internal controls were not adequately\n\nmaintained, or acted with reckless disregard for the truth, in that they caused the Company to\n\nimproperly engage in the fraudulent schemes and to fail to maintain adequate internal controls,\n\neven though such facts were available to them. Such improper conduct was committed knowingly\n\nor recklessly and for the purpose and effect of artificially inflating the price of PolarityTE\u2019s\n\nsecurities.\n\n\n\n\n 52\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 53 of 56\n\n\n\n\n 180. These actions were not a good-faith exercise of prudent business judgment to\nprotect and promote the Company\u2019s corporate interests.\n\n 181. As a direct and proximate result of the Individual Defendants\u2019 breaches of their\nfiduciary obligations, PolarityTE has sustained and continues to sustain significant damages. As a\n\nresult of the misconduct alleged herein, the Individual Defendants are liable to the Company.\n\n 182. Plaintiff on behalf of PolarityTE has no adequate remedy at law.\n THIRD CLAIM\n\n Against Individual Defendants for Unjust Enrichment\n\n 183. Plaintiff incorporates by reference and re-alleges each and every allegation set forth\nabove, as though fully set forth herein.\n\n 184. By their wrongful acts, violations of law, and false and misleading statements and\nomissions of material fact that they made and/or caused to be made, the Individual Defendants\n\nwere unjustly enriched at the expense of, and to the detriment of, PolarityTE.\n\n 185. The Individual Defendants either benefitted financially from the improper conduct\nor received bonuses, stock options, or similar compensation from PolarityTE that was tied to the\n\nperformance or artificially inflated valuation of PolarityTE, or received compensation that was\n\nunjust in light of the Individual Defendants\u2019 bad faith conduct.\n\n 186. Plaintiff, as a shareholder and a representative of PolarityTE, seeks restitution from\nthe Individual Defendants and seeks an order from this Court disgorging all profits, including from\n\ninsider transactions, benefits, and other compensation, including any performance-based or\n\nvaluation-based compensation, obtained by the Individual Defendants due to their wrongful\n\nconduct and breach of their fiduciary and contractual duties.\n\n 187. Plaintiff on behalf of PolarityTE has no adequate remedy at law.\n\n 53\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 54 of 56\n\n\n\n\n PRAYER FOR RELIEF\n\n FOR THESE REASONS, Plaintiff demands judgment in the Company\u2019s favor against all\n\nIndividual Defendants as follows:\n\n (a) Declaring that Plaintiff may maintain this action on behalf of PolarityTE,\n\nand that Plaintiff is an adequate representative of the Company;\n\n (b) Declaring that each of the Individual Defendants have breached or aided\n\nand abetted the breach of their fiduciary duties to PolarityTE;\n\n (c) Determining and awarding to PolarityTE the damages sustained by it as a\n\nresult of the violations set forth above from each of the Individual Defendants, jointly and\n\nseverally, together with pre-judgment and post-judgment interest thereon;\n\n (d) Directing PolarityTE and the Individual Defendants to take all necessary\n\nactions to reform and improve its corporate governance and internal procedures to comply with\n\napplicable laws and to protect PolarityTE and its shareholders from a repeat of the damaging events\n\ndescribed herein, including, but not limited to, putting forward for shareholder vote the following\n\nresolutions for amendments to the Company\u2019s Bylaws or Certificate of Incorporation and the\n\nfollowing actions as may be necessary to ensure proper corporate governance policies:\n\n 1. a proposal to strengthen the Board\u2019s supervision of operations and develop\n\n and implement procedures for greater shareholder input into the policies and\n\n guidelines of the board;\n\n 2. a provision to permit the shareholders of PolarityTE to nominate at least\n\n four candidates for election to the Board; and\n\n 3. a proposal to ensure the establishment of effective oversight of compliance\n\n with applicable laws, rules, and regulations;\n\n\n 54\n\f Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 55 of 56\n\n\n\n\n (e) Awarding PolarityTE restitution from Individual Defendants, and each of\n\nthem;\n\n (f) Awarding Plaintiff the costs and disbursements of this action, including\n\nreasonable attorneys\u2019 and experts\u2019 fees, costs, and expenses; and\n\n (g) Granting such other and further relief as the Court may deem just and\n\nproper.\n\n Dated this 10th day of October, 2018\n\n\n Respectfully submitted,\n\n\n /s/ Mark F. James\n Mark F. James\n HATCH, JAMES & DODGE, P.C.\n\n\n Phillip Kim\n THE ROSEN LAW FIRM, P.A.\n\n\n Timothy W. Brown\n THE BROWN LAW FIRM, P.C.\n\n Counsel for Plaintiff\n\n\n\n\n 55\n\fDocuSign Envelope ID: F40E9DE8-6973-4A4C-A3B1-945E68084241\n Case 2:18-cv-00791-TC Document 2 Filed 10/10/18 Page 56 of 56\n\n\n\n VERIFICATION\n\n\n\n I, Henry Mothner am the plaintiff in the within action. I have read the foregoing\n\n complaint and know the contents thereof. The allegations of the complaint are true of my\n\n personal knowledge, except as to the matters therein stated to be alleged on information\n\n and belief, and as to those matters I believe them to be true.\n\n I declare under penalty of perjury under the laws of the United States that\n\n the foregoing is true and correct. Executed this _th day of September 2018.\n 10/6/2018 4:11:20 PM PDT\n\n\n\n\n _______________________________\n Henry Mothner\n\f","ocr_status":2,"date_upload":null,"document_number":"2","attachment_number":null,"pacer_doc_id":"18304444944","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Complaint","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/57376909/","id":57376909,"tags":[],"absolute_url":"/docket/8219333/2/1/monther-v-lough/","date_created":"2019-01-14T11:23:47.022606-08:00","date_modified":"2019-01-14T11:23:47.029328-08:00","sha1":"","page_count":1,"file_size":519168,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"2","attachment_number":1,"pacer_doc_id":"18304444945","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Civil Cover Sheet Civil Cover Sheet","acms_document_guid":""}],"date_created":"2019-01-14T11:12:57.997866-08:00","date_modified":"2021-04-20T01:25:23.727713-07:00","date_filed":"2018-10-10","time_filed":null,"entry_number":2,"recap_sequence_number":"2018-10-10.001","pacer_sequence_number":15,"description":"COMPLAINT against All Defendants (Filing fee $ 400, receipt number 1088-3120743) filed by Henry Monther. (Attachments: # 1 Civil Cover Sheet Civil Cover Sheet) Assigned to Judge Tena Campbell (James, Mark) (Entered: 10/10/2018)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/53343764/","id":53343764,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/57375635/","id":57375635,"tags":[],"absolute_url":"/docket/8219333/1/monther-v-lough/","date_created":"2019-01-14T11:12:57.983684-08:00","date_modified":"2021-04-20T01:25:23.719284-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"1","attachment_number":null,"pacer_doc_id":"18304444377","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Remark - New Case","acms_document_guid":""}],"date_created":"2019-01-14T11:12:57.968914-08:00","date_modified":"2021-04-20T01:25:23.703669-07:00","date_filed":"2018-10-09","time_filed":null,"entry_number":1,"recap_sequence_number":"2018-10-09.001","pacer_sequence_number":13,"description":"Case has been indexed and assigned to Judge Tena Campbell. Plaintiff Henry Monther is directed to E-File the Complaint and cover sheet (found under Complaints and Other Initiating Documents) and pay the filing fee of $ 400.00 by the end of the business day.NOTE: The court will not have jurisdiction until the opening document is electronically filed and the filing fee paid in the CM/ECF system. Civil Summons may be issued electronically. Prepare the summons using the courts PDF version and email it to utdecf_clerk@utd.uscourts.gov for issuance. (nl) (Entered: 10/09/2018)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/44181632/","id":44181632,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/46464994/","id":46464994,"tags":[],"absolute_url":"/docket/8219333/9/monther-v-lough/","date_created":"2018-11-26T12:20:25.094430-08:00","date_modified":"2021-04-20T01:25:23.922530-07:00","sha1":"120b0f0c7503549c62b2b23b650980b13a9efd69","page_count":3,"file_size":114576,"filepath_local":"recap/gov.uscourts.utd.112015/gov.uscourts.utd.112015.9.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.utd.112015/gov.uscourts.utd.112015.9.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 2:18-cv-00791-TC Document 9 Filed 11/26/18 Page 1 of 3\n\n\n\n\nKenneth B. Black (05588)\nken.black@stoel.com\nMichael R. Menssen (15424)\nmichael.menssen@stoel.com\nSTOEL RIVES LLP\n201 S. Main Street, Suite 1100\nSalt Lake City, UT 84111\nTelephone: (801) 328-3131\n\nAttorneys for Defendants PolarityTE, Inc.,\nDenver Lough, Michael Beeghley, Willie C.\nBogan, Jeff Dyer, Steven Gorlin, Jon Mogford,\nJohn Stetson and Edward Swanson\n\n IN THE UNITED STATES DISTRICT COURT\n\n DISTRICT OF UTAH\n\nHENRY MONTHER, derivatively on behalf of ORDER GRANTING STIPULATION\nPOLARITYTE, INC., REGARDING STAY OF ACTION AND\n RELATED MATTERS\n Plaintiff,\n Case No. 2:18-cv-00791-TC\n v.\n The Honorable. Tena Campbell\nDENVER LOUGH, MICHAEL BEEGHLEY,\nWILLIE C. BOGAN, JEFF DYER, STEVEN\nGORLIN, JON MOGFORD, JOHN\nSTETSON, and EDWARD SWANSON,\n\n Defendants,\n\n and\n\nPOLARITYTE, INC.,\n\n Nominal Defendant.\n\n\n\n\n99281322.1 0068409-00001\n\f Case 2:18-cv-00791-TC Document 9 Filed 11/26/18 Page 2 of 3\n\n\n\n\n PURSUANT TO THE STIPULATION OF THE PARTIES, and good cause appearing:\n\n 1. Counsel for Defendants will accept service of the complaint in the above-\n\ncaptioned action on behalf of each of the Defendants subject to the terms of this order.\n\n 2. The above-captioned action is hereby stayed, including all deadlines and hearings,\n\nuntil the motion(s) to dismiss the Class Actions has/have been (i) denied in whole or in part; or\n\n(ii) granted with prejudice, and any appeals pertaining to the motion(s) to dismiss have\n\nconcluded, or the time for seeking appellate review passed with no further action from the Class\n\nAction parties.\n\n 3. Defendants shall promptly notify Plaintiff of any related derivative actions that\n\nare filed against Defendants.\n\n 4. Plaintiff reserves the option to seek to terminate this stay if any related derivative\n\naction is not stayed for a similar or longer duration by giving thirty (30) days\u2019 notice in writing.\n\nDuring the thirty (30) days following written notice, the Parties will confer in good faith\n\nregarding a proposed schedule.\n\n 5. Notwithstanding the staying of the Action, Plaintiff may file an amended\n\ncomplaint during the pendency of the stay. Defendants shall not be obligated to respond to the\n\ncurrent complaint or any subsequent complaint while the Action is stayed, and Defendants\n\nreserve all rights with respect to any subsequent complaint.\n\n 6. By entering into this Stipulation, the Parties do not waive any rights not\n\nspecifically addressed herein. Defendants preserve all rights, objections, and defenses, and\n\nPlaintiff preserves all rights and claims.\n\n\n\n\n99281322.1 0068409-00001 2\n\f Case 2:18-cv-00791-TC Document 9 Filed 11/26/18 Page 3 of 3\n\n\n\n\n 7. The Parties agree to meet and confer in good faith following any lifting of this\n\nstay to submit a proposed scheduling order to the Court.\n\n IT IS SO ORDERED.\n\n Dated: November 26, 2018\n The Honorable Tena Campbell\n United States District Court Judge\n\n\n\n\n99281322.1 0068409-00001 3\n\f","ocr_status":2,"date_upload":null,"document_number":"9","attachment_number":null,"pacer_doc_id":"18304486620","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order on Motion to Stay","acms_document_guid":""}],"date_created":"2018-11-26T12:20:25.087913-08:00","date_modified":"2021-04-20T01:25:23.908588-07:00","date_filed":"2018-11-26","time_filed":null,"entry_number":9,"recap_sequence_number":"2018-11-26.001","pacer_sequence_number":48,"description":"ORDER granting 6 Motion to Stay pending rulings in other cases filed as class actions. Signed by Judge Tena Campbell on 11/26/18 (alt) (Entered: 11/26/2018)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/43818633/","id":43818633,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/8219333/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/46083731/","id":46083731,"tags":[],"absolute_url":"/docket/8219333/6/monther-v-lough/","date_created":"2018-11-20T17:21:45.674911-08:00","date_modified":"2021-04-20T01:25:23.851757-07:00","sha1":"78d6d2f450ce16e372a401d4a360852aab06ec8a","page_count":4,"file_size":29441,"filepath_local":"recap/gov.uscourts.utd.112015/gov.uscourts.utd.112015.6.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.utd.112015/gov.uscourts.utd.112015.6.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 2:18-cv-00791-TC Document 6 Filed 11/20/18 Page 1 of 4\n\n\n\n\nKenneth B. Black (05588)\nken.black@stoel.com\nMichael R. Menssen (15424)\nmichael.menssen@stoel.com\nSTOEL RIVES LLP\n201 S. Main Street, Suite 1100\nSalt Lake City, UT 84111\nTelephone: (801) 328-3131\n\nAttorneys for Defendants PolarityTE, Inc.,\nDenver Lough, Michael Beeghley, Willie C.\nBogan, Jeff Dyer, Steven Gorlin, Jon Mogford,\nJohn Stetson and Edward Swanson\n\n IN THE UNITED STATES DISTRICT COURT\n\n DISTRICT OF UTAH\n\nHENRY MONTHER, derivatively on behalf of STIPULATION REGARDING STAY OF\nPOLARITYTE, INC., ACTION AND RELATED MATTERS\n\n Plaintiff, Case No. 2:18-cv-00791-TC\n\n v. The Honorable Tena Campbell\n\nDENVER LOUGH, MICHAEL BEEGHLEY,\nWILLIE C. BOGAN, JEFF DYER, STEVEN\nGORLIN, JON MOGFORD, JOHN\nSTETSON, and EDWARD SWANSON,\n\n Defendants,\n\n and\n\nPOLARITYTE, INC.,\n\n Nominal Defendant.\n\n\n\n\n99279628.1 0068409-00001\n\f Case 2:18-cv-00791-TC Document 6 Filed 11/20/18 Page 2 of 4\n\n\n\n\n WHEREAS, on October 10, 2018, plaintiff Henry Monther (\u201cPlaintiff\u201d) filed a putative\n\nstockholder derivative action (the \u201cAction\u201d) on behalf of nominal defendant PolarityTE, Inc.\n\n(\u201cPolarityTE\u201d or the \u201cCompany\u201d) alleging violations of law and breaches of fiduciary duty\n\nagainst certain of the Company\u2019s current and former officers and directors (collectively, the\n\n\u201cIndividual Defendants\u201d), and with the Company, \u201cDefendants\u201d) (Plaintiff and Defendants are\n\ncollectively referred to herein as the \u201cParties\u201d);\n\n WHEREAS, factually related securities class actions captioned Moreno v. PolarityTE,\n\nInc., et al., Case No. 2:18-cv-00510-JNP-PMW (D. Utah) and Lawi v. PolarityTE, Inc., et al.,\n\nCase No. 2:18-cv-00541-DB-EJF (D. Utah) are currently pending in the U.S. District Court for\n\nthe District of Utah (the \u201cClass Actions\u201d), in which the plaintiffs assert federal securities claims\n\nagainst the Company and certain of its officers and directors;\n\n WHEREAS, PolarityTE and the other defendants in the Class Actions intend to file\n\nmotion(s) to dismiss the Class Actions pursuant to a stipulated briefing schedule;\n\n WHEREAS, while Plaintiff believes this Action has merit independent of and is not\n\ndependent on the outcome of the Class Actions, the Parties agree that a ruling on PolarityTE\u2019s\n\nanticipated motion to dismiss the Class Actions may help inform the manner in which this\n\nAction proceeds;\n\n WHEREAS, in an effort to proceed in the most efficient manner, the Parties agree that\n\nthis Action should be temporarily stayed until the resolution of the motion(s) to dismiss the Class\n\nActions;\n\n NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by the Parties,\n\nthrough their undersigned counsel of record and subject to approval of the Court, as follows:\n\n 1. The undersigned counsel for Defendants has been authorized to accept, and\n\nhereby agrees to accept, service of the complaint in this Action on behalf of each of the\n\nDefendants, subject to the terms set forth herein.\n\n\n\n\n99279628.1 0068409-00001 2\n\f Case 2:18-cv-00791-TC Document 6 Filed 11/20/18 Page 3 of 4\n\n\n\n\n 2. This Action, including all deadlines and hearings, is hereby stayed until the\n\nmotion(s) to dismiss in the Class Actions has/have been (i) denied in whole or in part; or (ii)\n\ngranted with prejudice, and any appeals pertaining to the motion(s) to dismiss have concluded, or\n\nthe time for seeking appellate review passed with no further action from the Class Action parties.\n\n 3. Defendants shall promptly notify Plaintiff of any related derivative actions that\n\nare filed against Defendants.\n\n 4. Plaintiff reserves the option to terminate this stay if any related derivative action\n\nis not stayed for a similar or longer duration by giving thirty (30) days\u2019 notice in writing. During\n\nthe thirty (30) days following written notice, the Parties will confer in good faith regarding a\n\nproposed schedule.\n\n 5. Notwithstanding the staying of the Action, Plaintiff may file an amended\n\ncomplaint during the pendency of the stay. Defendants shall not be obligated to respond to the\n\ncurrent complaint or any subsequent complaint while the Action is stayed, and Defendants\n\nreserve all rights with respect to any subsequent complaint.\n\n 6. By entering into this Stipulation, the Parties do not waive any rights not\n\nspecifically addressed herein. Defendants preserve all rights, objections, and defenses, and\n\nPlaintiff preserves all rights and claims.\n\n 7. The Parties agree to meet and confer in good faith following any lifting of this\n\nstay to submit a proposed scheduling order to the Court.\n\n IT IS SO STIPULATED.\n\n\n\n\n99279628.1 0068409-00001 3\n\f Case 2:18-cv-00791-TC Document 6 Filed 11/20/18 Page 4 of 4\n\n\n\n\nDated: November 20, 2018 STOEL RIVES LLP\n\n By: /s/ Kenneth B. Black\n Kenneth B. Black\n Michael R. Menssen\n\n Attorneys for Defendants PolarityTE, Inc., Denver\n Lough, Michael Beeghley, Willie C. Gogan, Jeff\n Dyer, Steven Gorlin, Jon Mogford, John Stetson\n and Edward Swanson\nDated: November 20, 2018 HATCH, JAMES & DODGE, P.C.\n\n By /s/ Mark F. James (with permission via email)\n Mark F. James\n\n Attorneys for Plaintiff Henry Monther\n\nDated: November 20, 2018 THE BROWN LAW FIRM, P.C.\n\n By /s/ Timothy W. Brown (with permission via email)\n Timothy W. Brown\n\n Attorneys for Plaintiff\n\nDated: November 20, 2018 THE ROSEN LAW FIRM, P.A.\n\n By /s/ Phillip Kim (with permission via email)\n Phillip Kim\n\n Attorneys for Plaintiff\n\n\n\n\n99279628.1 0068409-00001 4\n\f","ocr_status":2,"date_upload":null,"document_number":"6","attachment_number":null,"pacer_doc_id":"18304484714","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Motion to Stay","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/58197733/","id":58197733,"tags":[],"absolute_url":"/docket/8219333/6/1/monther-v-lough/","date_created":"2019-01-17T17:22:19.637353-08:00","date_modified":"2019-06-01T08:31:50.286766-07:00","sha1":"","page_count":3,"file_size":11264,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"6","attachment_number":1,"pacer_doc_id":"18304484715","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Text of Proposed Order","acms_document_guid":""}],"date_created":"2018-11-20T17:21:45.666425-08:00","date_modified":"2021-04-20T01:25:23.838341-07:00","date_filed":"2018-11-20","time_filed":null,"entry_number":6,"recap_sequence_number":"2018-11-20.001","pacer_sequence_number":24,"description":"Stipulated MOTION to Stay Action and Related Matters filed by Defendants Michael Beeghley, Willie C. Bogan, Jeff Dyer, Steven Gorlin, Denver Lough, Jon Mogford, Polarityte, John Stetson, Edward Swanson. (Attachments: # 1 Text of Proposed Order) Attorney Kenneth B. Black added to party Michael Beeghley(pty:dft), Attorney Kenneth B. Black added to party Willie C. Bogan(pty:dft), Attorney Kenneth B. Black added to party Jeff Dyer(pty:dft), Attorney Kenneth B. Black added to party Steven Gorlin(pty:dft), Attorney Kenneth B. Black added to party Denver Lough(pty:dft), Attorney Kenneth B. Black added to party Jon Mogford(pty:dft), Attorney Kenneth B. Black added to party Polarityte(pty:dft), Attorney Kenneth B. Black added to party John Stetson(pty:dft), Attorney Kenneth B. Black added to party Edward Swanson(pty:dft)(Black, Kenneth) (Entered: 11/20/2018)","tags":[]}],"entries_total":"https://www.courtlistener.com/api/rest/v4/docket-entries/?count=on&docket=8219333&page_size=40"}