Item 2.01. Completion of Acquisition or Disposition of Assets.
On April 4, 2019 (the “Effective Date”),
Precision Therapeutics Inc. (“Precision”) completed the business combination of Helomics Acquisition, Inc., a wholly-owned
subsidiary of Precision (“Merger Sub”), with Helomics Holding Corporation (“Helomics”) in accordance with
the terms of the Amended and Restated Agreement and Plan of Merger, dated as of October 26, 2018 (as amended, the “Merger
Agreement”). Pursuant to the terms of the Merger Agreement, the parties to the Merger Agreement consummated a forward-triangular
merger, whereby Helomics merged with and into Merger Sub, with Merger Sub surviving the merger as a wholly-owned subsidiary of
Precision (the “Merger”). Prior to consummation of the Merger, Precision held 25% of the outstanding voting stock of
Helomics; effective on the effective date, Precision acquired ownership of 100% of the capital stock of Helomics, which is now
a wholly owned subsidiary of Precision. As a result of the consummation of the Merger, Precision now has full access to Helomics’
suite of Artificial Intelligence (AI), precision diagnostic and integrated Contract Research Organization (CRO) capabilities, which
improve patient care and advance the development of innovative clinical products and technologies for the treatment of cancers.
As consideration for the Merger, on the
Effective Date and at the effective time of the Merger, all outstanding shares of Helomics not already held by Precision were converted
into the right to receive a proportionate share of 4.0 million shares of newly-issued shares of common stock, par value $0.01 (“Common
Stock”), of Precision and 3.5 million shares of newly-issued Series D preferred stock of Precision (“Series D Preferred
Stock” and, together with Common Stock, “Merger Shares”). 860,000 of the Common Stock Merger Shares were deposited
in escrow and are to be held for 18 months to satisfy indemnification claims under the Merger Agreement. The Merger Shares are
subject to the following restrictions, which shall lapse one year after the Effective Date: (a) the Merger Shares may not be sold
or otherwise transferred for 90 days after the Effective Date and (b) with respect to any holders (or groups of affiliated holders)
who receive at least 200,000 Merger Shares, such Merger Shares may not be sold, in any three-month period, in an amount greater
than one percent of the outstanding Common Stock of Precision. In addition to the issuance of the Merger Shares, 1,100,000 shares
of Precision Common Stock that had been held in an escrow account in connection with Precision’s prior acquisition of shares
of Helomics were released to the stockholders of Helomics.
In accordance with the Merger Agreement,
and pursuant to an Offer to Exchange dated February 13, 2019 and included in Precision’s Form S-4 Registration Statement
under the Securities Act of 1933, as filed with the United States Securities and Exchange Commission on January 24, 2019 (SEC File
No. 333-228031) (the “Registration Statement), Precision made an offer to issue (the “Exchange Offer”) to
holders of certain promissory notes of Helomics (the “Helomics Notes Payable”) and accompanying warrants to purchase
Helomics common stock (the “Helomics Warrants”) (a) shares of Common Stock of Precision in exchange for the tendered
Helomics Notes Payable and (b) warrants to purchase shares of Common Stock of Precision at an exercise price of $1.00 per share
(“Precision Warrants”) in exchange for the Helomics Warrants held by such holders. The issuance occurred on the Effective
Date and at the effective time of the Merger. In connection with the Exchange Offer, Precision issued an aggregate 8,637,323 shares
of Common Stock of Precision to the holders of the Helomics Notes Payable, which such amount is equal to all of the outstanding
principal and accrued and unpaid interest on all of the Helomics Notes Payable, calculated as of the Effective Date, divided by
$1.00 per share of Common Stock of Precision.
Additionally, in connection with the Exchange
Offer, Precision issued an aggregate 14,245,063 Precision Warrants to (a) all holders of Helomics Notes Payable who accepted the
Exchange Offer and (b) three holders of Helomics Notes Payable who did not accept the Exchange Offer, but executed a note extension
agreement with Precision, pursuant to which such holders agreed to accept the terms of the Exchange Offer with respect to their
Helomics Warrants. The amount of Precision Warrants issued was determined according to the following formula: 0.6 multiplied by
all Helomics Warrants held by a tendering holder of Helomics Warrants. In addition, Precision issued an aggregate 597,000 warrants
to purchase Precision Common Stock at an exercise price of $0.01 per share in exchange for 995,000 warrants to purchase Helomics
Common Stock at an exercise price of $0.01per share.
The Common Stock of Precision, Series D
Preferred Stock of Precision and the Precision warrants described above, and the shares issuable upon conversion or exercise thereof
were registered with the United States Securities and Exchange Commission on the Registration Statement.
Following the Merger and the Exchange Offer,
as of April 8, 2019, the Company had outstanding: (a) 29,997,467 shares of Common Stock, (b) 3,500,000 shares of Series D Preferred
Stock, which would convert to Common Stock on a 1:1 basis as described in Item 5.03, (c) warrants to purchase 20,856,390 shares
of Common Stock and (d) options to purchase 7,086,946 shares of Common Stock.
The Merger Agreement is attached to this
report as Exhibit 2.1 and incorporated herein by reference. The foregoing description of the Merger Agreement and the transactions
contemplated and effected thereby, including, without limitation, the Merger, is not complete and is qualified in its entirety
by the contents of the actual Merger Agreement.