UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2019
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _____________ to _____________
Commission File Number 001-38185
PRESSURE BIOSCIENCES, INC.
(Exact name of registrant as specified in its charter)
| Massachusetts | 04-2652826 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| 14 Norfolk Avenue | ||
| South Easton, Massachusetts | 02375 | |
| (Address of principal executive offices) | (Zip Code) |
(508) 230-1828
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
[X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [X] |
Smaller reporting company [X] | Emerging growth company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act.
[ ] Yes [X] No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 7, 2019.
| Class | Number of Shares | |||
| Common Stock, par value $.01 per share | 1,938,046 | |||
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| June 30, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 117,933 | $ | 103,118 | ||||
| Accounts receivable, net of $0 reserve at June 30, 2019 and December 31, 2018 | 410,613 | 474,830 | ||||||
| Inventories, net of $273,547 reserve at June 30, 2019 and December 31, 2018 | 744,806 | 765,478 | ||||||
| Prepaid expenses and other current assets | 127,657 | 170,734 | ||||||
| Total current assets | 1,401,009 | 1,514,160 | ||||||
| Investment in equity securities | 16,643 | 16,643 | ||||||
| Property and equipment, net | 94,277 | 69,272 | ||||||
| Right of use asset leases | 108,332 | 136,385 | ||||||
| Intangible assets, net | 620,192 | 663,462 | ||||||
| TOTAL ASSETS | $ | 2,240,453 | $ | 2,399,922 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 514,948 | $ | 658,856 | ||||
| Accrued employee compensation | 438,608 | 456,932 | ||||||
| Accrued professional fees and other | 1,435,210 |
1,112,995 | ||||||
| Other current liabilities | 1,909,514 | 1,233,325 | ||||||
| Deferred revenue | 25,702 | 20,623 | ||||||
| Operating lease liability | 67,674 | 59,799 | ||||||
| Convertible debt, net of unamortized discounts of $360,297 and $156,180, respectively | 4,835,066 | 4,000,805 | ||||||
| Other debt, net of unamortized discounts of $13,833 and $9,118, respectively | 1,107,667 | 852,315 | ||||||
| Other related party debt | 15,000 | 15,000 | ||||||
| Total current liabilities | 10,349,389 | 8,410,650 | ||||||
| LONG TERM LIABILITIES | ||||||||
| Operating lease liability, net of current portion | 40,658 | 76,586 | ||||||
| Deferred revenue | 32,506 | 37,757 | ||||||
| TOTAL LIABILITIES | 10,422,553 |
8,524,993 | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 5) | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Series D Convertible Preferred Stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively (Liquidation value of $300,000) | 3 | 3 | ||||||
| Series G Convertible Preferred Stock, $.01 par value; 240,000 shares authorized; 80,570 shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively | 806 | 806 | ||||||
| Series H Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 10,000 shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively | 100 | 100 | ||||||
| Series H2 Convertible Preferred Stock, $.01 par value; 21 shares authorized; 21 shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively | - | - | ||||||
| Series J Convertible Preferred Stock, $.01 par value; 6,250 shares authorized; 3,458 shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively | 35 | 35 | ||||||
| Series K Convertible Preferred Stock, $.01 par value; 15,000 shares authorized; 6,880 shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively | 68 | 68 | ||||||
| Series AA Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 7,518 and 6,499 shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively | 76 | 65 | ||||||
| Common stock, $.01 par value; 100,000,000 shares authorized; 1,889,616 and 1,684,182 shares issued and outstanding on June 30, 2019 and December 31, 2018 respectively | 18,896 |
16,842 | ||||||
| Warrants to acquire common stock | 21,446,642 | 19,807,247 | ||||||
| Additional paid-in capital | 41,676,926 |
39,777,301 | ||||||
| Accumulated deficit | (71,325,652 | ) | (65,727,538 | ) | ||||
| Total stockholders’ deficit | (8,182,100 |
) | (6,125,071 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 2,240,453 | $ | 2,399,922 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 3 |
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended June 30, |
For
the Six Months Ended June 30, |
|||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue: | ||||||||||||||||
| Products, services, other | $ | 518,663 | $ | 618,418 | $ | 1,028,903 | $ | 1,203,662 | ||||||||
| Grant revenue | - | 20,355 | - | 45,885 | ||||||||||||
| Total revenue | 518,663 | 638,773 | 1,028,903 | 1,249,547 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of products and services | 304,172 | 270,046 | 613,884 | 594,835 | ||||||||||||
| Research and development | 291,538 | 323,832 | 556,242 | 648,808 | ||||||||||||
| Selling and marketing | 186,609 | 224,942 | 374,824 | 499,410 | ||||||||||||
| General and administrative | 1,136,768 |
740,843 | 2,281,189 | 1,535,448 | ||||||||||||
| Total operating costs and expenses | 1,919,087 | 1,559,663 | 3,826,139 | 3,278,501 | ||||||||||||
| Operating loss | (1,400,424 | ) | (920,890 | ) | (2,797,236 | ) | (2,028,954 | ) | ||||||||
| Other expense: | ||||||||||||||||
| Interest expense | (1,074,488 | ) | (1,159,242 | ) | (1,587,194 | ) | (2,282,387 | ) | ||||||||
| Other expense | (185,469 | ) | (9,582 | ) | (290,314 | ) | (14,312 | ) | ||||||||
| (Loss) Gain on extinguishment of debt | (106,461 | ) | 471,612 | (147,271 | ) | 475,897 | ||||||||||
| Incentive shares/warrants | - | (663,130 | ) | - | (663,130 | ) | ||||||||||
| Total other (expense) income | (1,366,418 | ) | (1,360,342 | ) | (2,024,779 | ) | (2,483,932 | ) | ||||||||
| Net loss | (2,766,842 | ) | (2,281,232 | ) | (4,822,015 | ) | (4,512,886 | ) | ||||||||
| Deemed dividend on down round feature | - | (213,012 | ) | - | (213,012 | ) | ||||||||||
| Deemed dividend on beneficial conversion feature | (889,532 | ) | (10,532,291 | ) | (1,949,731 | ) | (10,532,291 | ) | ||||||||
| Preferred stock dividends | (420,489 | ) | (95,879 | ) | (776,099 | ) | (95,879 | ) | ||||||||
| Net loss attributable to common stockholders | $ | (4,076,863 | ) | $ | (13,122,414 | ) | $ | (7,547,845 | ) | $ | (15,354,068 | ) | ||||
| Basic and diluted net loss per share attributable to common stockholders | $ | (2.22 | ) | $ | (9.20 | ) | $ | (4.24 | ) | $ | (11.01 | ) | ||||
| Weighted average common stock shares outstanding used in the basic and diluted net loss per share calculation | 1,837,913 | 1,426,698 | 1,780,881 |
1,395,187 | ||||||||||||
The accompanying notes are an integral part of these unaudited consolidated
| 4 |
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2019 | 2018 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (4,822,015 | ) | $ | (4,512,886 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Right of use asset | 28,053 | - | ||||||
| Common stock issued for debt extension | - | 28,490 | ||||||
| Depreciation and amortization | 47,180 | 45,874 | ||||||
| Accretion of interest and amortization of debt discount | 290,040 | 986,155 | ||||||
| Issuance of incentive shares and common stock warrants | 168,000 | 663,130 | ||||||
| Inventory reserve recovery | - | (39,900 | ) | |||||
| Loss(Gain) on extinguishment of debt | 147,271 | (475,897 | ) | |||||
| Stock-based compensation expense | 607,574 | 148,270 | ||||||
| Shares issued with debt | - | 7,800 | ||||||
| Impairment loss on investment | - | 1,834 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 64,217 | (319,242 | ) | |||||
| Inventories | 20,673 | (2,501 | ) | |||||
| Prepaid expenses and other assets | 43,077 | 19,422 | ||||||
| Accounts payable | 152,275 | 108,698 | ||||||
| Accrued employee compensation | (18,323 |
) | 58,925 | |||||
| Operating lease liability | (28,053 | ) | - | |||||
| Deferred revenue and other accrued expenses | (172 | ) | 678,789 | |||||
| Net cash used in operating activities | (3,300,203 | ) | (2,603,039 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property plant and equipment | (28,915 | ) | - | |||||
| Net cash used in investing activities | (28,915 | ) | - | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from revolving note payable | - | 460,000 | ||||||
| Net proceeds from warrant exercises | - | - | ||||||
| Net proceeds from Series AA Convertible Preferred Stock | 2,292,300 | 226,091 | ||||||
| Net proceeds from convertible debt | 3,339,050 | 3,242,950 | ||||||
| Net proceeds from non-convertible debt – third party | 1,211,500 | 952,501 | ||||||
| Net proceeds from non-convertible debt – related party | 125,000 |
102,100 | ||||||
| Payments on convertible debt | (2,533,985 | ) | (1,518,500 | ) | ||||
| Payments on non-convertible debt – related party | (125,000 |
) | (52,100 | ) | ||||
| Payments on non-convertible debt | (964,932 | ) | (872,545 | ) | ||||
| Net cash provided by financing activities | 3,343,933 | 2,540,497 | ||||||
| NET INCREASE (DECREASE) IN CASH | 14,815 | (62,542 | ) | |||||
| CASH AT BEGINNING OF YEAR | 103,118 | 81,033 | ||||||
| CASH AT END OF PERIOD | $ | 117,933 | $ | 18,491 | ||||
| SUPPLEMENTAL INFORMATION | ||||||||
| Interest paid in cash | $ | 1,162,557 | $ | 525,979 | ||||
| Income taxes paid | - | - | ||||||
| NON CASH TRANSACTIONS: | ||||||||
| Common stock issued in lieu of cash for interest | - | 90,023 | ||||||
| Common stock issued with debt | 167,359 | 170,745 | ||||||
| Discount from warrants issued with convertible debt | - | 162,023 | ||||||
| Discount from one-time interest | - | 154,500 | ||||||
Common stock issued in lieu of cash for dividend |
151,993 | - | ||||||
| Preferred stock dividends | 776,099 | 95,879 | ||||||
| Conversion of debt into preferred stock | - | 12,688,634 | ||||||
| Contingent beneficial conversion feature on convertible note | - | 253,000 | ||||||
| Deemed dividend-triggered down round feature | - | 213,012 | ||||||
| Deemed dividend-beneficial conversion feature | 1,949,731 | 10,532,291 | ||||||
| Derivative liability released upon warrant exercise | - | - | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 5 |
CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
| Series D Preferred Stock | Series G Preferred Stock | Series H Preferred Stock | Series H(2)Preferred Stock | Series J Preferred Stock | Series K Preferred Stock | Series AA Preferred Stock | Common Stock | Stock | Additional Paid-In | Accumulated other comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Warrants | Capital | loss | Deficit | Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2017 | 300 | $ | 3 | 80,570 | $ | 806 | 10,000 | $ | 100 | 21 | $ | - | 3,458 | $ | 35 | 6,880 | 68.00 | - | - | 1,342,858 | $ | 13,429 | $ | 9,878,513 | $ | 30,833,549 | $ | - | $ | (55,349,299 | ) | $ | (14,622,796 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 86,020 | - | - | 86,020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for dividends paid-in-kind | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 22,606 | 226 | - | 80,529 | - | - | 80,755 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock issued for debt extension | 7,000 | 70 | - | 28,420 | 28,490 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued with debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 15,750 | 158 | - | 59,106 | - | - | 59,263 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued with debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 118,416 | - | - | - | 118,416 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (2,231,654 | ) | (2,231,654 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE, March 31, 2018 | 300 | $ | 3 | 80,570 | $ | 806 | 10,000 | $ | 100 | 21 | $ | - | 3,458 | $ | 35 | 6,880 | $ | 68 | - | $ | - | 1,388,214 | $ | 13,883 | $ | 9,996,929 | $ | 31,087,624 | $ | - | $ | (57,580,953 | ) | $ | (16,481,506 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 62,249 | - | - | 62,249 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Down round feature triggered | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 10,532,291 | - | 10,532,291 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Down round feature triggered on warrants | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 213,012 | 213,012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Incentive Shares/Warrants | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 110,833 | 1,108 | 312,637 | 339,149 | - | - | 652,894 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series AA Preferred Stock dividend | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (95,879 | ) | (95,879 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contingent beneficial feature on convertible notes | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 253,000 | - | - | 253,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of debt and interest for preferred stock | - | - | - | - | - | - | - | - | - | - | - | - | - | 51 | - | - | 6,826,710 | 5,861,874 | - | - | 12,688,635 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for dividends paid-in-kind | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 2,637 | 26 | - | 9,242 | - | - | 9,268 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deemed dividend-beneficial conversion feature | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (10,532,291 | ) | - | - | (10,532,291 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deemed dividend-beneficial conversion feature on warrants and debentures | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (213,012 | ) | (213,012 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrant modification | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 60,120 | - | - | - | 60,120 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock offering | - | - | - | - | - | - | - | - | - | - | - | - | 120 | 1 | - | - | 172,932 | 127,067 | - | - | 300,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Offering costs for issuance of preferred stock | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 37,782 | (111,691 | ) | - | - | (73,909 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued with debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 35,410 | 354 | - | 118,927 | - | - | 119,281 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued with debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 43,607 | - | - | - | 43,607 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (2,281,232 | ) | (2,281,232 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE, June 30, 2018 | 300 | $ | 3 | 80,570 | $ | 806 | 10,000 | $ | 100 | 21 | $ | - | 3,458 | $ | 35 | 6,880 | $ | 68 | 120 | $ | 52 | 1,537,094 | $ | 15,371 | $ | 17,450,717 | $ | 37,747,441 | $ | - | $ | (59,958,064 | ) | $ | (4,743,472 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Series D Preferred Stock | Series G Preferred Stock | Series H Preferred Stock | Series H(2)Preferred Stock | Series J Preferred Stock | Series K Preferred Stock | Series AA Preferred Stock | Common Stock | Stock | Additional Paid-In | Accumulated other comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Warrants | Capital | loss | Deficit | Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2018 | 300 | $ | 3 | 80,570 | $ | 806 | 10,000 | $ | 100 | 21 | $ | - | 3,458 | $ | 35 | 6,880 | 68.00 | 6,499 | 65.00 | 1,684,184 | $ | 16,842 | $ | 19,807,247 | $ | 39,777,301 | $ | - | $ | (65,727,538 | ) | $ | (6,125,071 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 245,392 | - | - | 245,392 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series AA Preferred Stock dividend | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (355,610 | ) | (355,610 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for services | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 50,000 | 500 | 167,500 | - | - | 168,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Beneficial conversion feature on Series AA convertible preferred stock | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 1,060,199 | - | - | 1,060,199 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deemed dividend-beneficial conversion feature | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (1,060,199 | ) | - | - | (1,060,199 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock offering | - | - | - | - | - | - | - | - | - | - | - | - | 560 | 6 | - | - | 738,528 | 661,466 | - | - | 1,400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Offering costs for issuance of preferred stock | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 160,764 | (300,764 | ) | - | - | (140,000 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock issued for debt extension | 16,350 | 163 | - | 38,824 | 38,988 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued with debt | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 17,958 | 180 | - | 50,553 | - | - | 50,733 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (2,055,173 | ) | (2,055,173 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE, March 31, 2019 | 300 | $ | 3 | 80,570 | $ | 806 | 10,000 | $ | 100 | 21 | $ | - | 3,458 | $ | 35 | 6,880 | $ | 68 | 7,059 | $ | 71 | 1,768,492 | $ | 17,685 | $ | 20,706,539 | $ | 40,640,273 | $ | - | $ | (68,138,321 | ) | $ | (6,772,741 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 362,182 | - | - | 362,182 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series AA Convertible Preferred Stock dividend | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (420,489 | ) | (420,489 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Beneficial conversion feature on Series AA Convertible Preferred Stock | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 889,532 | - | - | 889,532 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deemed dividend-beneficial conversion feature | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (889,532 | ) | - | - | (889,532 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for dividends paid-in-kind | - | - | - | - | - | - | - | - | - | - | - | - | 42,456 | 425 | 151,568 | - | - | 151,993 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock offering | - | - | - | - | - | - | - | - | - | - | - | - | 459 | 5 | 608,852 | 538,062 | - | - | 1,146,919 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Offering costs for issuance of preferred stock | - | - | - | - | - | - | - | - | - | - | - | - | - | 131,251 | (245,870 | ) | - | - | (114,619 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued with debt | - | - | - | - | - | - | - | - | - | - | - | - | - | 29,641 | 296 | 105,293 | - | - | 105,589 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock issued for debt extension | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 49,027 | 490 | 125,418 | - | - | 125,908 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (2,766,842 | ) | (2,766,842 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE, June 30, 2019 | 300 | $ | 3 | 80,570 | $ | 806 | 10,000 | $ | 100 | 21 | $ | - | 3,458 | $ | 35 | 6,880 | $ | 68 | 7,518 | $ | 76 | 1,889,616 | $ | 18,896 | $ | 21,446,642 | $ | 41,676,926 | $ | - | $ | (71,325,652 | ) | $ | (8,182,100 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 6 |
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019
(UNAUDITED)
| 1) | Business Overview, Liquidity and Management Plans |
Pressure BioSciences, Inc. (“we”, “our”, the “Company”) is focused on solving the challenging problems inherent in biological sample preparation, a crucial laboratory step performed by scientists worldwide working in biological life sciences research. Sample preparation is a term that refers to a wide range of activities that precede most forms of scientific analysis. Sample preparation is often complex, time-consuming, and in our belief, one of the most error-prone steps of scientific research. It is a widely used laboratory undertaking, the requirements of which drive what we believe is a large and growing worldwide market. We have developed and patented a novel, enabling technology platform that can control the sample preparation process. It is based on harnessing the unique properties of high hydrostatic pressure. This process, called pressure cycling technology, or PCT, uses alternating cycles of hydrostatic pressure between ambient and ultra-high levels (45,000 psi or greater) to safely, conveniently and reproducibly control the actions of molecules in biological samples, such as cells and tissues from human, animal, plant, and microbial sources.
Our pressure cycling technology uses internally developed instrumentation that is capable of cycling pressure between ambient and ultra-high levels - at controlled temperatures and specific time intervals - to rapidly and repeatedly control the interactions of biomolecules, such as DNA, RNA, proteins, lipids, and small molecules. Our laboratory instrument, the Barocycler®, and our internally developed consumables product line, including PULSE® (Pressure Used to Lyse Samples for Extraction) Tubes, other processing tubes, and application specific kits (which include consumable products and reagents) together make up our PCT Sample Preparation System, or PCT SPS.
In 2015, together with an investment bank, we formed a subsidiary called Pressure BioSciences Europe (“PBI Europe”) in Poland. We have 49% ownership interest with the investment bank retaining 51%. As of now, PBI Europe does not have any operating activities and we cannot reasonably predict when operations will commence. Therefore, we do not have control of the subsidiary and did not consolidate in our financial statements. PBI Europe did not have any operations in the six months ended June 30, 2019 or in fiscal year 2018.
| 2) | Going Concern |
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, we have experienced negative cash flows from operations with respect to our pressure cycling technology business since our inception. As of June 30, 2019, we do not have adequate working capital resources to satisfy our current liabilities and as a result, there is substantial doubt regarding our ability to continue as a going concern. We have been successful in raising cash through debt and equity offerings in the past and as described in Notes 6 and 7. In addition we raised cash through debt financing after June 30, 2019 as described in Note 8. We have financing efforts in place to continue to raise cash through debt and equity offerings. Although we have successfully completed financings and reduced expenses in the past, we cannot assure you that our plans to address these matters in the future will be successful. These financial statements do not include any adjustments that might result from this uncertainty.
| 7 |
| 3) | Interim Financial Reporting |
The accompanying unaudited consolidated balance sheet as of December 31, 2018, which was derived from audited financial statements, and the unaudited interim consolidated financial statements of Pressure BioSciences, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K (the “Form 10-K”) for the fiscal year ended December 31, 2018 as filed with the Securities and Exchange Commission on April 16, 2019.
| 4) | Summary of Significant Accounting Policies |
Principles of Consolidation
The consolidated financial statements include the accounts of Pressure BioSciences, Inc., and its wholly-owned subsidiary PBI BioSeq, Inc. All intercompany accounts and transactions have been eliminated in consolidation.
Reclassifications
Certain prior year amounts have been reclassified to conform to our current year presentation.
Recent Accounting Standards
| 8 |
In July 2018, the FASB issued ASU 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting as an amendment and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. The new guidance is effective for the Company in annual periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. Based on the new guidance, the Company will measure its nonemployee stock awards at grant date not when the stock awards are vested. This new guidance did not have a material impact on the Company’s consolidated financial statements.
Revenue Recognition
We recognize revenue in accordance with FASB ASC 606, ASC 606, Revenue from Contracts with Customers, and ASC 340-40, Other Assets and Deferred Costs—Contracts with Customers. Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We enter into sales contracts that may consist of multiple distinct performance obligations where certain performance obligations of the sales contract are not delivered in one reporting period. We measure and allocate revenue according to ASC 606-10.
We identify a performance obligation as distinct if both the following criteria are true: the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. Determining the standalone selling price (“SSP”) and allocation of consideration from a contract to the individual performance obligations, and the appropriate timing of revenue recognition, is the result of significant qualitative and quantitative judgments. Management considers a variety of factors such as historical sales, usage rates, costs, and expected margin, which may vary over time depending upon the unique facts and circumstances related to each performance obligation in making these estimates. While changes in the allocation of the SSP between performance obligations will not affect the amount of total revenue recognized for a particular contract, any material changes could impact the timing of revenue recognition, which would have a material effect on our financial position and result of operations. This is because the contract consideration is allocated to each performance obligation, delivered or undelivered, at the inception of the contract based on the SSP of each distinct performance obligation.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.
Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are in included in cost of revenues as consistent with treatment in prior periods.
Our current Barocycler® instruments require a basic level of instrumentation expertise to set-up for initial operation. To support a favorable first experience for our customers, upon customer request, and for an additional fee, will send a highly trained technical representative to the customer site to install Barocycler®s that we sell, lease, or rent through our domestic sales force. The installation process includes uncrating and setting up the instrument, followed by introductory user training. Our sales arrangements do not provide our customers with a right of return. Any shipping costs billed to customers are recognized as revenue.
The majority of our instrument and consumable contracts contain pricing that is based on the market price for the product at the time of delivery. Our obligations to deliver product volumes are typically satisfied and revenue is recognized when control of the product transfers to our customers. Concurrent with the transfer of control, we typically receive the right to payment for the shipped product and the customer has significant risks and rewards of ownership of the product. Payment terms require customers to pay shortly after delivery and do not contain significant financing components.
| 9 |
We apply ASC 845, “Accounting for Non-Monetary Transactions”, to account for products and services sold through non-cash transactions based on the fair values of the products and services involved, where such values can be determined. Non-cash exchanges would require revenue to be recognized at recorded cost or carrying value of the assets or services sold if any of the following conditions apply:
| a) | The fair value of the asset or service involved is not determinable. | |
| b) | The transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange. | |
| c) | The transaction lacks commercial substance. |
We currently record revenue for its non-cash transactions at recorded cost or carrying value of the assets or services sold.
In accordance with FASB ASC 842, Leases, we account for our Barocycler lease agreements in which the Company is the lessor under the operating method. The new standard provides a number of optional practical expedients in transition. We elected the ‘package of practical expedients’ for our instrument leases, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.
We record revenue over the life of the lease term and we record depreciation expense on a straight-line basis over the thirty-six-month estimated useful life of the Barocycler® instrument. The depreciation expense associated with assets under lease agreement is included in the “Cost of PCT products and services” line item in our accompanying consolidated statements of operations. Many of our lease and rental agreements allow the lessee to purchase the instrument at any point during the term of the agreement with partial or full credit for payments previously made. We pay all maintenance costs associated with the instrument during the term of the leases.
Revenue from government grants is recorded when expenses are incurred under the grant in accordance with the terms of the grant award.
Deferred revenue represents amounts received from grants and service contracts for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. Revenue from service contracts is recorded ratably over the length of the contract.