- PolarityTE's main asset is a single patent application it acquired for $104.7 million, and it has failed to release full pre-clinical data or start planned human trials on time. - The company has a dilutive capital structure that could triple the number of shares outstanding and provides little protection for current common shareholders. - Hindenburg Research believes PolarityTE is overvalued given its progress to date and risks for common shareholders, and the common stock is likely worth pennies per share.

1. Hindenburg Research December, 7, 2017
PolarityTE: Investors Beware
• PolarityTE’s sole key asset is a patent application that it acquired for a value of $104.7
million.
• Common equity holders are exposed to severe potential dilution given a capital
structure that is saddled with convertibles.
• PolarityTE has failed to release its full pre-clinical data and its planned human trials
appear delayed.
• The entity has been reverse merged several times into a variety of businesses. We
believe PolarityTE is the latest in a series of failed story stocks.
• We believe the common equity is likely worthless.
Introduction
PolarityTE Inc. (Nasdaq:COOL) formerly Majesco Entertainment Inc. is a company that aims to
“induce a paradigm shift” in the field of tissue engineering and regenerative medicine. The company
was formed via reverse merger of PolarityTE into the publicly traded entity of Majesco, as announced
in December 2016. Prior to the merger, Majesco had been focused on the unrelated field of video
game publishing.
The public entity has managed to morph into at least 6 different seemingly unrelated companies over
the years (Majesco was formerly Spinrocket, which was formerly Connectiv, which was formerly
CDBeat, which was formerly SMD Group, according to its SEC page).
We believe PolarityTE is merely the latest iteration in a series of failed story stocks, and that common
shareholders are exposed to severe risks.
Prior to its Merger with Majesco, PolarityTE Owned a Single
Patent Application
Generally when we see an entity reverse merge onto NASDAQ, the deal will include a reasonably
strong pretense for the value generation potential of the company. Often such a pretense will include

2. either physical assets or a strong intellectual property portfolio. In the case of COOL, it appears the
Majesco entity had merged with Polarity in order to take a single, lonely patent application public.
The loneliness of the patent application (and the fact that it was merely an application) were not
immediately clear to us from a reading of the filings. At various times filings indicate that the merged
Polarity entity owned a (i) “patented” platform; or (ii) multiple patent applications (as indicated by the
“s” at the end of the word ‘applications’). This shape-shifting description is best shown through the
December 2016 8-K announcing the merger in which both versions of the story were detailed in the
same document:
1. “Polarity is the owner of a novel regenerative medicine and tissue engineering platform
developed and patented by Denver Lough, MD, PhD.”
2. Later in the filing, “Polarity’s pending patent applications include claims to material aspects
of Polarity’s procedures that are not currently protected by issued patents. The patent
application process can be time consuming and expensive.”
A search of the US Patent and Trademark Office (USPTO) database and later filings show that neither
description appeared to be accurate. Polarity was in fact the owner of a single patent application (without
an ‘s’ at the end) filed by Dr. Denver Lough, a resident associated with John’s Hopkins University.
Per the 10-Q dated April 30, 2017:
“Dr. Lough is the named inventor under a pending patent application for a novel regenerative
medicine and tissue engineering platform filed in the United States and elsewhere. The Company
believes that its future success depends significantly on its ability to protect its inventions and
technology. Accordingly, the Company is seeking to acquire the pending patent application.”
In case there was any doubt about whether the merged business didn’t just consist of a mere pending
patent application, an SEC correspondence letter requested that the company detail the operations of
the entity being merged. The company responded by affirming that Polarity indeed had been
functionally a shell with no employees, operations, or property other than the pending patent
application:
“There was never any intent to acquire an ongoing business and no ongoing business was acquired.
The asset is preserved in a stand-alone entity merely as a vehicle to provide the Company a seamless
means to acquire the asset (a patent application) without undue cost, expense and time. Polarity NV
has never had employees and therefore no employees will be acquired in the transaction.”
The company paid a substantial amount for the patent application. According to the company’s filings
the company paid to Dr. Lough preferred shares “convertible into an aggregate of 7,050,000 shares
of the Company’s common stock with a fair value of approximately $104.7 million.” Note that those
same shares would represent about $200 million if sold at today’s prices.
PolarityTE is a Share Dilution Machine
PolarityTE aims to revolutionize the skin regeneration market by developing and commercializing its
intellectual property. We will get more into our thoughts on their chances of success shortly, but we

3. first want to address what we view as a major hurdle for common shareholders hoping to benefit from
the company’s efforts to achieve new medical breakthroughs.
Namely, COOL has been rapidly diluting shareholders, and the current capital structure seems to
represent a massive wall of potential new dilution. Below is a breakdown of the common shares
outstanding over the past several periods, based on company filings:
• 09/12/2017: 6,333,985 shares of common stock outstanding
• 06/05/2017: 5,876,952 shares of common stock outstanding
• 03/08/2017: 4,501,768 shares of common stock outstanding
• 10/31/2016: 2,782,963 shares of common stock outstanding
For those keeping track at home, that is an increase of about 127%--more than double—in just over
a year.
Beyond the ballooning number of common shares outstanding, as of 7/31/2017 common shares
issuable upon conversion of preferred stock and exercise of stock options represents another potential
11,939,093 shares, a tripling of the existing cap structure.
Keep in mind that convertible holders have additional rights including “the right to receive a
liquidation preference, prior to any distribution of our assets to the holders of our Common Stock.”
Convertible holders can also be paid dividends on an ‘as converted’ basis, so that dividends could be
paid out as if preferred shares were fully converted to common. In other words, if the company
distributes cash via a dividend or liquidation, the common holders could experience dilutive effects
via those events as well.
How Are Things Coming Along So Far with the Skin
Regeneration Revolution?
Dilutive share structure aside, the company seems to be advancing its technology at a rather
uninspiring pace. In a press release on June 8th
the company announced that pre-clinical results
demonstrate that the technology can successfully regenerate skin and hair in full thickness swine flu
models. On a conference call following the release, CEO Denver Lough stated:
“The preclinical image based data released today is by no means even 1% of the data we have collected,
which will be released in due course via peer reviewed articles and other public forums.”
We searched Google Scholar and ResearchGate for any peer reviewed articles on the company’s pre-
clinical research and found zero articles since that release. We also found no subsequent data released
by the company. We have asked investor relations whether the company has released its data and
whether there are any peer reviewed articles on the data and have not heard back as of this writing.
Should we hear back from the company we will update this accordingly.
In that same June 8th
press release the company seemingly indicated that additional future milestones
would be forthcoming:

4. “The Company expects to initiate a human clinical trial evaluating the autologous homologous
SkinTE™ construct in the third quarter of 2017.”
There have been no human trials announced since that date. We checked clinicaltrials.gov to see if any
trials had been posted and found zero matches.
October 19th
Update Leaves Us Befuddled
Subsequent to the promises of the release of data and human clinical trials, on October 19th
the
company stated in a press release:
“Clinical application is expected in the fourth quarter of 2017, and data is planned to be released
through multiple channels in the first half of 2018.”
Again, we haven’t seen the data or seen any registered clinical trials thus far. We checked with investor
relations to get a sense of the expected timeline of human clinical trials given that we are currently
near the end of 2017. We have not heard back as of this writing but should the company respond we
will update this accordingly.
The same release noted that “multiple value analysis committees have approved SkinTE for use in
their respective medical institutions”, though the release did not name any of the institutions that had
approved the product. It is unclear to us exactly what was “approved” given that the product has not
yet been tested in humans. After all, how can something be approved before its even been proven to
work?
Again we checked with investor relations to see if they could name any of the medical institutions that
have approved the product or give a sense of what the approvals represent, and have not heard back
as of this writing. Should we hear from the company we will update this accordingly.
Lots of PR With Few Tangible Results
Despite the apparent absence of released pre-clinical data or the commencement of clinical trials, we
have noticed that the company has managed to generate a tremendous amount of PR via various
media outlets. It has also issued about 25 press releases over the course of the past year, and assembled
a clinical advisory board of over 14 medical professionals. Such loud moves with little hard data or
tangible advancement to show for it do not inspire our confidence.
Conclusion: Not COOL!
The path to bringing the company's lonely patent application through clinical testing and market entry
is likely an expensive proposition. Even when factoring in the proceeds of yet another recent
convertible offering the company’s estimated working capital of approximately $20 million seems to
represent the mere beginning of what would require substantial additional capital.
We cannot claim to be experts in the field of regenerative skin medicine, and we truly hope the product
ends up working in humans. Despite this, we do have a fairly thorough understanding of the effects

5. of dilutive financing to common shareholders. On a fully diluted/converted/exercised basis and at
current prices, the company’s market cap would be north of $500 million. We do not believe the
company’s progress to date can justify that valuation no matter how many great scientists the company
adds to its board of advisors.
Given all of the above, we believe common shares are likely worth pennies rather than dollars. We
urge cautious investing to all.
Disclosure: We are short shares of PolarityTE. Please see full
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