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 September 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 December 10, 2019.

 

Class   Number of Shares 
Common Stock, par value $.01 per share   2,399,674 

 

 

 

   
 

 

TABLE OF CONTENTS

 

  Page
   
PART I - FINANCIAL INFORMATION 3
   
Item 1. Unaudited Financial Statements 3
   
Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 3
   
Consolidated Statements of Operations for the Three- and Nine-Months Ended September 30, 2019 and 2018 4
   
Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2019 and 2018 5
   
Consolidated Statements of Equity for the Nine Months Ended September 30, 2019 and 2018 6
   
Notes to Unaudited Consolidated Financial Statements 7
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29
   
Item 3. Quantitative and Qualitative Disclosure About Market Risk 35
   
Item 4. Controls and Procedures 35
   
PART II - OTHER INFORMATION 36
   
Item 1. Legal Proceedings 36
   
Item 1A. Risk Factors 36
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 36
   
Item 3. Defaults Upon Senior Securities 36
   
Item 4. Mine Safety Disclosures 36
   
Item 5. Other Information 36
   
Item 6. Exhibits 37
   
SIGNATURES 38

 

 2 
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

   September 30, 2019   December 31, 2018 
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $135,364   $103,118 
Accounts receivable, net of $0 reserve at September 30, 2019 and December 31, 2018   411,442    474,830 
Inventories, net of $273,547 reserve at September 30, 2019 and December 31, 2018   713,886    765,478 
Prepaid expenses and other current assets   239,216    170,734 
Total current assets   1,499,908    1,514,160 
Investment in equity securities   16,643    16,643 
Property and equipment, net   94,242    69,272 
Other assets   201,534    136,385 
Intangible assets, net   598,558    663,462 
TOTAL ASSETS  $2,410,885   $2,399,922 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
CURRENT LIABILITIES          
Accounts payable  $612,839   $658,856 
Accrued employee compensation   393,498    456,932 
Accrued professional fees and other   1,573,872    1,112,995 
Other current liabilities   2,536,812    1,233,325 
Deferred revenue   27,495    20,623 
Operating lease liability   92,950    59,799 
Convertible debt, net of unamortized discounts of $326,380 and $156,180, respectively   4,888,935    4,000,805 
Other debt, net of unamortized discounts of $7,036 and $9,118, respectively   1,808,237    852,315 
Other related party debt   79,000    15,000 
Total current liabilities   12,013,638    8,410,650 
LONG TERM LIABILITIES          
Operating lease liability, net of current portion   -    76,586 
Deferred revenue   21,776    37,757 
TOTAL LIABILITIES   12,035,414    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 September 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 September 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 September 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 September 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 September 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 September 30, 2019 and December 31, 2018, respectively   68    68 
Series AA Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 7,899 and 6,499 shares issued and outstanding on September 30, 2019 and December 31, 2018, respectively   80    65 
Common stock, $.01 par value; 100,000,000 shares authorized; 2,172,163 and 1,684,182 shares issued and outstanding on September 30, 2019 and December 31, 2018 respectively   21,722    16,842 
Warrants to acquire common stock   22,064,307    19,807,247 
Additional paid-in capital   43,263,325    39,777,301 
Accumulated deficit   (74,974,975)   (65,727,538)
Total stockholders’ deficit   (9,624,529)   (6,125,071)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $2,410,885   $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
September 30,

   For the Nine Months Ended
September 30,
 
   2019   2018   2019   2018 
Revenue:                    
Products, services, other  $501,158   $461,017   $1,530,061   $1,664,679 
Grant revenue   -    60,749    -    106,634 
Total revenue   501,158    521,766    1,530,061    1,771,313 
                     
Costs and expenses:                    
Cost of products and services   285,794    234,320    899,678    829,155 
Research and development   276,712    262,054    832,954    910,862 
Selling and marketing   133,032    223,286    507,856    722,696 
General and administrative   874,611    735,505    3,155,800    2,270,953 
Total operating costs and expenses   1,570,149    1,455,165    5,396,288    4,733,666 
                     
Operating loss   (1,068,991)   (933,399)   (3,866,227)   (2,962,353)
                     
Other income (expense):                    
Interest expense   (2,124,477)   (733,209)   (4,001,711)   (3,015,596)
(Loss) Gain on extinguishment of debt   (185,203)   (140,765)   (332,474)   335,132 
Incentive shares/warrants   -    -    -    (663,130)
Other income (expense)   4,674   (1,283)   4,400   (15,595)
Total other expense   (2,305,006)   (875,257)   (4,329,785)   (3,359,189)
Income tax benefit   217,168   -    217,168   - 
Net loss   (3,156,829)   (1,808,656)   (7,978,844)   (6,321,542)
Deemed dividend on down round feature   -    -    -    (213,012)
Deemed dividend on beneficial conversion feature   (675,979)   (1,146,280)   (2,625,710)   (11,678,571)
Preferred stock dividends   (492,494)   (277,439)   (1,268,593)   (373,318)
Net loss attributable to common stockholders  $(4,325,302)   (3,232,375)  $(11,873,147)   (18,586,443)
Basic and diluted net loss per share attributable to common stockholders  $(2.20)  $(2.01)  $(6.29)  $(12.67)
                     
Weighted average common stock shares outstanding used in the basic and diluted net loss per share calculation   1,967,872    1,606,575    1,887,393    1,466,424 

 

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 Nine Months Ended 
   September 30, 
   2019   2018 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(7,978,844)  $(6,321,542)
Adjustments to reconcile net loss to net cash used in operating activities:          
Non-cash lease expense   43,435    - 
Common stock issued for debt extension   -    33,218 
Depreciation and amortization   68,849    70,681 
Accretion of interest and amortization of debt discount   886,950    1,405,490 
Issuance of incentive shares and common stock warrants   -    663,130 
Issuance of shares for services rendered   245,000    - 
Inventory reserve recovery   -    (39,900)
Loss(Gain) on extinguishment of debt   332,474    (335,132)
Stock-based compensation expense   722,576    299,584 
Shares issued with debt   -    7,800 
Impairment loss on investment   -    3,182 
Changes in operating assets and liabilities:          
Accounts receivable   63,388    (167,481)
Inventories   51,593    (2,372)
Prepaid expenses and other assets   (177,066)   141,214 
Accounts payable   838,278   16,390 
Accrued employee compensation   (63,434)   3,702 
Operating lease liability   (43,435)   - 
Deferred revenue and other accrued expenses   (9,109)   606,454 
Net cash used in operating activities   (5,019,345)   (3,615,582)
           
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 Series AA Convertible Preferred Stock   3,185,100    1,255,463 
Net proceeds from convertible debt   4,601,300    3,848,484 
Net proceeds from non-convertible debt – third party   2,956,750    1,595,901 
Net proceeds from non-convertible debt – related party   239,000    116,100 
Payments on convertible debt   (3,705,485)   (2,097,750)
Payments on non-convertible debt   (2,021,159)   (1,579,130)
Payments on non-convertible debt – related party   (175,000)   (58,600)
Net cash provided by financing activities   5,080,506    3,540,468 
           
NET INCREASE (DECREASE) IN CASH   32,246    (75,114)
CASH AT BEGINNING OF YEAR   103,118    81,033 
CASH AT END OF PERIOD  $135,364   $5,919 
           
SUPPLEMENTAL INFORMATION          
Interest paid in cash  $2,571,231   $856,562 
NON CASH TRANSACTIONS:          
Loan extension fees added to principal  $77,500      
Common stock issued for conversion of debt and accrued interest   

342,250

    - 
Common stock issued in lieu of cash for dividend   

190,123

    - 
Common stock issued in lieu of cash for interest   -    201,432 
Common stock issued for services to be rendered   -    173,520 
Common stock issued with debt   226,133    222,272 
Discount from warrants issued with convertible debt   -    162,023 
Discount from one-time interest   -    169,500 
Preferred stock dividends   1,268,593    373,318 
Conversion of debt into preferred stock   -    12,688,634 
Conversion of preferred stock into common stock   160    - 
Contingent beneficial conversion feature on convertible note   451,665    253,000 
Deemed dividend-triggered down round feature   -    213,012 
Deemed dividend-beneficial conversion feature   2,625,710    11,678,571 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

 5 
 

 

PRESSURE BIOSCIENCES, INC.

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    -    -    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    -    -    59,264 
Warrants issued with debt   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    118,416    -    -    -    118,416 
Unrealized loss on investments, net of tax   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    - 
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)  $(16,481,505)
Stock-based compensation   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    62,249    -    -    62,249 
Issuance of common stock for services   -    -    -    -    -    -    -    -    -    -    -    -    -    -              -         -    -    - 
Down round feature triggered   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -         10,532,291   -    213,012  10,532,291
Incentive Shares/Warrants   -    -    -    -    -    -    -    -    -    -    -    -    -    -    110,833    1,108    312,637   $339,149    -    -    652,894 
Warrant exercise   -    -    -    -    -    -    -    -    -    -    -    -    -    -              -         -    -    - 
Series AA Preferred Stock dividend   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    (95,879)   (95,879)
Contingent beneficial feature on convertible notes                                                                                       $

253,000

             $

253,000

 
Issuance of warrants for services   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    - 
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)    -    $(213,012)    (10,532,291) 
Conversion of Series K convertible preferred stock   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    - 
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 
Warrant modification   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    60,120    -         -    60,120 
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)  $(4,743,471)
Stock-based compensation   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    151,315    -    -    151,315 
Issuance of common stock for services   -    -    -    -    -    -    -    -    -    -    -    -    -    -    48,000    480    -    173,040    -    -    173,520 
Incentive Shares/Warrants   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Warrant exercise   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Series AA Preferred Stock dividend   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    (277,439)   (277,439)
Issuance of common stock for dividends paid-in-kind   -    -    -    -    -    -    -    -    -    -    -    -    -    -    30,764    308    -    111,101    -    -    111,409 
Conversion of Series G convertible preferred stock   -    -              -    -    -    -    -    -    -    -    -    -         -    -         -    -    - 
Deemed dividend-beneficial conversion feature   -    -    -    -    -    -    -    -              -    -    -    -         -    -    -    -    -    - 
Preferred Stock offering   -    -    -    -    -    -    -    -    -    -    -    -    460    5         -    679,707    470,288    -    -    1,150,000 
Offering costs for issuance of preferred stock   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    160,265    (280,895)   -    -    (120,630)
Common Stock issued for debt extension   -    -    -    -    -    -    -    -    -    -    -    -    -    -    7,200    72    -    25,056    -    -    25,128 
Stock issued with debt   -    -    -    -    -    -    -    -    -    -    -    -    -    -    34,078    341    -    107,286    -    -    107,627 
Warrants issued with debt   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -         -    -    -    - 
Unrealized loss on investments, net of tax   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    - 
Net loss   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -         -    (1,752,154)   (1,752,154)
BALANCE, September 30, 2018   300   $3    80,570   $806    10,000   $100    21   $-    3,458   $35    6,880   $68   $580   $57    1,657,136   $16,572   $18,290,689   $38,504,632   $-   $(61,987,657)  $(5,174,695)

 

  

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     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)