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, 2020

 

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
N/A   N/A    N/A

 

 

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 and posted 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 and post 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” and “smaller reporting 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

 

The number of shares outstanding of the Issuer’s common stock as of November 12, 2020 was 3,884,825.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
   
PART I - FINANCIAL INFORMATION 3
   
Item 1. Unaudited Financial Statements 3
   
Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 3
   
Consolidated Statements of Operations for the Three- and Nine-Months Ended September 30, 2020 and 2019 4
   
Consolidated Statements of Cash Flows for the Nine-Months Ended September 30, 2020 and 2019 5
   
Consolidated Statements of Changes in Stockholders’ Deficit for the Nine Months Ended September 30, 2020 and 2019 6
   
Notes to Unaudited Consolidated Financial Statements 8
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28
   
Item 3. Quantitative and Qualitative Disclosure About Market Risk 33
   
Item 4. Controls and Procedures 33
   
PART II - OTHER INFORMATION 34
   
Item 1. Legal Proceedings 34
   
Item 1A. Risk Factors 34
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
   
Item 3. Defaults Upon Senior Securities 35
   
Item 4. Mine Safety Disclosures 35
   
Item 5. Other Information 35
   
Item 6. Exhibits 36
   
SIGNATURES 37

 

2

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

   September 30, 2020   December 31, 2019 
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $94,752   $29,625 
Accounts receivable   330,459    229,402 
Inventories, net of $342,496 reserve at September 30, 2020 and December 31, 2019   516,205    617,716 
Loan receivable   801,250    - 
Prepaid expenses and other current assets   159,739    213,549 
Total current assets   1,902,405    1,090,292 
Investment in equity securities   503,366    16,643 
Property and equipment, net   18,733    55,590 
Right of use asset leases   20,958    76,586 
Intangible assets, net   512,019    576,923 
TOTAL ASSETS  $2,957,481   $1,816,034 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
CURRENT LIABILITIES          
Accounts payable  $706,319   $815,764 
Accrued employee compensation   450,591    451,200 
Accrued professional fees and other   2,035,252    1,658,452 
Accrued interest   5,593,508    2,949,621 
Deferred revenue   47,623    23,248 
Operating lease liability   20,958    76,586 
Convertible debt, net of unamortized discounts of $4,738,724 and $619,227, respectively   7,095,113    6,121,338 
Other debt, net of unamortized discounts of $0 and $1,769, respectively   886,501    1,675,667 
Other related party debt   105,000    81,500 
Total current liabilities   16,940,865    13,853,376 
LONG TERM LIABILITIES          
Long term debt   527,039    - 
Deferred revenue   25,957    18,065 
TOTAL LIABILITIES   17,493,861    13,871,441 
COMMITMENTS AND CONTINGENCIES (Note 4)          
STOCKHOLDERS’ DEFICIT          
Series D Convertible Preferred Stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on September 30, 2020 and December 31, 2019, 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, 2020 and December 31, 2019, respectively   806    806 
Series H Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 10,000 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively   100    100 
Series H2 Convertible Preferred Stock, $.01 par value; 21 shares authorized; 21 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively   -    - 
Series J Convertible Preferred Stock, $.01 par value; 6,250 shares authorized; 3,458 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively   35    35 
Series K Convertible Preferred Stock, $.01 par value; 15,000 shares authorized; 6,880 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively   68    68 
Series AA Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 7,983 and 7,939 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively   80    80 
Common stock, $.01 par value; 100,000,000 shares authorized; 3,839,256 and 2,549,620 shares issued and outstanding on September 30, 2020 and December 31, 2019 respectively   38,392    25,496 
Warrants to acquire common stock   28,207,172    22,599,177 
Additional paid-in capital   49,079,182    44,261,105 
Accumulated deficit   (91,862,218)   (78,942,277)
Total stockholders’ deficit   (14,536,380)   (12,055,407)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $2,957,481   $1,816,034 

 

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,		 
   2020   2019   2020   2019 
Revenue:                    
Products, services, other  $533,862   $501,158   $1,055,889   $1,530,061 
Total revenue   533,862    501,158    1,055,889    1,530,061 
                     
Costs and expenses:                    
Cost of products and services   247,013    285,794    557,041    899,678 
Research and development   247,432    276,712    807,724    832,954 
Selling and marketing   173,372    133,032    524,586    507,856 
General and administrative   684,807    874,611    2,711,032    3,155,800 
Total operating costs and expenses   1,352,624    1,570,149    4,600,383    5,396,288 
                     
Operating loss   (818,762)   (1,068,991)   (3,544,494)   (3,866,227)
                     
Other (expense) income:                    
Interest expense, net   (2,204,593)   (2,124,477)   (5,501,272)   (4,001,711)
Unrealized gain on investment in equity securities   140,461    -    486,723    - 
Loss on extinguishment of liabilities   (395,854)   (185,203)   (3,242,372)   (332,474)
Other income   -    4,674    -    4,400 
Total other expense   (2,459,986)   (2,305,006)   (8,256,921)   (4,329,785)
Income tax benefit        217,168         217,168 
Net loss   (3,278,748)   (3,156,829)   (11,801,415)   (7,978,844)
Deemed dividend on beneficial conversion feature   -    (675,979)   -    (2,625,710)
Preferred stock dividends   (396,970)   (492,494)   (1,118,526)   (1,268,593)
Net loss attributable to common stockholders  $(3,675,718)  $(4,325,302)  $(12,919,941)  $(11,873,147)
Basic and diluted net loss per share attributable to common stockholders  $(1.02)  $(2.20)  $(4.22)  $(6.29)
                     
Weighted average common stock shares outstanding used in the basic and diluted net loss per share calculation   3,612,958    1,967,872    3,059,095    1,887,393 

 

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

 

4

 

 

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

    For the Nine Months Ended  
    September 30,  
    2020     2019  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (11,801,415 )   $ (7,978,844 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Non-cash lease expense     55,628       43,435  
Common stock issued for interest and extension fees     242,350       -  
Depreciation and amortization     103,424       68,849  
Accretion of interest and amortization of debt discount     3,454,470       886,950  
Issuance of shares for services rendered     -       245,000  
Loss on extinguishment of accrued liabilities and debt     1,036,638       332,474  
Stock-based compensation expense     373,652       722,576  
Gain on investment in equity securities     (486,723 )     -  
Common stock issued for services     87,963       -  
Changes in operating assets and liabilities:                
Accounts receivable     (101,057 )     63,388  
Inventories     101,511       51,593  
Prepaid expenses and other assets     53,810       (177,066 )
Accounts payable     (109,445 )     838,278  
Accrued employee compensation     (609 )     (63,434 )
Operating lease liability     (55,628 )     (43,435 )
Deferred revenue and other accrued expenses     3,138,667       (9,109 )
Net cash used in operating activities     (3,906,764 )     (5,019,345 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Advance on loan receivable     (801,250 )     -  
Purchases of property plant and equipment     (1,663 )     (28,915 )
Net cash used in investing activities     (802,913 )     (28,915 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Net proceeds from Series AA Convertible Preferred Stock     -       3,185,100  
Net proceeds from convertible debt     6,977,800       4,601,300  
Net proceeds from non-convertible debt – third party     990,539       2,956,750  
Net proceeds from non-convertible debt – related party     38,500       239,000  
Payments on convertible debt     (1,972,007 )     (3,705,485 )
Payments on non-convertible debt – related party     (15,000)       (175,000 )
Payments on non-convertible debt     (1,245,028 )     (2,021,159 )
Net cash provided by financing activities     4,774,804       5,080,506  
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS     65,127       32,246  
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR     29,625       103,118  
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 94,752     $ 135,364  
                 
SUPPLEMENTAL INFORMATION                
Interest paid in cash   $ 530,009     $ 2,571,231  
NON CASH TRANSACTIONS:                
Loan extension fees and interest added to principal   $ 152,552     $ 77,500  
Conversion of debt for Series AA preferred stock     110,000       -  
Common stock issued for debt settlement     374,550       -  
Common stock issued to settle accrued liabilities     127,855       -  
Common stock issued with debt     147,775       226,133  
Discount from warrants issued with debt     4,261,055       -  
Common stock issued in lieu of cash for dividend     221,374       190,123  
Preferred stock dividends     1,118,526       1,268,593  
Conversion of debt and interest into common stock     1,830,543       342,250  
Conversion of preferred stock into common stock     -       160  
Discount due to beneficial conversion feature     1,353,694       451,665  
Deemed dividend-beneficial conversion feature     -       2,625,710  

 

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

 

5

 

 

PRESSURE BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)

 

   Series D   Series G   Series H   Series H(2)   Series J   Series K   Series AA                        
   Preferred
Stock		   Preferred
Stock		   Preferred
Stock		   Preferred
Stock		   Preferred
Stock		   Preferred
Stock		   Preferred
Stock		   Common Stock   Stock  

Additional

Paid-In

   Accumulated   Total
Stockholders’		 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Warrants   Capital   Deficit   Deficit 
BALANCE, December 31, 2018   300   $3    80,570   $806    10,000   $100    21   $-    3,458   $35    6,880   $68    6,499    65    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    -    38,825         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 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)
Stock-based compensation   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    115,002    -    115,002 
Issuance of common stock for services   -    -    -    -    -    -    -    -    -    -    -    -    -    -    25,000    250         76,750    -    77,000 
Series AA Preferred Stock dividend   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -         (492,494)   (492,494)
Conversion of debt and interest for common stock   -    -    -    -    -    -    -    -    -    -    -    -    -    -    120,000    1,200    -    341,050    -    342,250 
Issuance of common stock for dividends paid-in-kind   -    -    -    -    -    -    -    -    -    -    -    -              19,454    195         37,935    -    38,130 
Conversion of Series AA convertible preferred stock   -    -              -    -    -    -    -    -    -    -    (16)   (0)   16,000    160         (160)   -    (0)
Deemed dividend-beneficial conversion feature   -    -    -    -    -    -    -    -              -    -                             (675,979)   -     (675,979)
Beneficial feature on Preferred Stock Offering   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    675,979    -    675,979 
Preferred Stock offering   -    -    -    -    -    -    -    -    -    -    -    -    397    4    -     -     511,739    480,257    -     992,000 
Offering costs for issuance of preferred stock   -    -    -    -    -    -    -    -    -    -    -    -    -     -               105,926    (205,126)   -     (99,200)
Stock issued with debt   -    -    -    -    -    -    -    -    -    -    -    -    -     -     22,483    225    -    58,509    -     58,734 
Common Stock/Warrants issued for debt extension   -    -    -    -    -    -    -    -    -    -    -    -    -     -     79,610    796    -   $230,517    -     231,313 
Beneficial conversion feature on convertible debt   -    -    -     -     -     -     -     -     -     -     -     -     -     -     -     -     -    $451,665    -     451,665 
Net loss   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -         (3,156,829)   (3,156,829)
BALANCE, September 30, 2019   300   $3    80,570   $806    10,000   $100    21   $-    3,458   $35    6,880   $68    7,899   $80    2,172,163   $21,722   $22,064,307   $43,263,325   $(74,974,975)  $(9,624,529)

 

6

 

 

  

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   Total  Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Warrants   Capital   Deficit   Deficit 
BALANCE, December 31, 2019   300   $3    80,570   $806    10,000   $100    21   $-    3,458   $35    6,880   $68    7939   $80    2,549,620   $25,496   $22,599,177   $44,261,105   $(78,942,277)  $(12,055,407)
Stock-based compensation   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    241,769    -    241,769 
Series AA Preferred Stock dividend   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -         (324,586)   (324,586)
Issuance of common stock to settle accrued liabilities   -    -    -    -    -    -    -    -    -    -    -    -    -    -    66,500    665    -     127,190    -    127,855 
Common stock issued for debt settlement   -    -    -    -    -    -    -    -    -    -    -    -    -    -    10,000    100    -    24,900    -    25,000 
Beneficial conversion feature on debt   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    404,608    -    404,608 
Warrants issued for debt extension   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    609,143    -     -    609,143 
Issuance of common stock for debt extension and interest paid in kind   -    -    -     -     -     -     -     -     -    -     -     -     -     -     38,521    385    -    60,175    -     60,560 
Warrants issued with debt   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    1,205,010    -    -    1,205,010 
Net loss   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    (3,953,885)   (3,953,885)
BALANCE, March 31, 2020   300   $3    80,570   $806    10,000   $100    21   $-    3,458   $35    6,880   $68    7,939   $80    2,664,641   $26,646   $24,413,330   $45,119,747   $(83,220,748)  $(13,659,933)
Stock-based compensation   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    65,341    -    65,341 
Series AA Preferred Stock dividend   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -     -     -     -    (396,970)   (396,970)
Beneficial conversion feature on debt   -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    577,489    -    577,489 
Issuance of common stock for services   -    -    -    -    -    -    -    -    -    -    -    -    -    -    25,000    250    -     87,713    -    87,963 
Issuance of common stock for interest paid-in-kind   -    -    -    -    -    -    -    -    -    -    -    -    -    -    42,510    425    -     98,799    -    99,224 
Issuance of common stock for dividends paid-in-kind   -    -    -    -    -    -    -    -    -    -    -    -    -    -    64,388    644    -     176,104    -    176,748 
Conversion of debt and interest for common stock   -    -    -    -    -    -    -    -    -    -    -    -    -    -    410,746    4,107    -     1,288,542    -    1,292,649 
Warrants issued with debt   -    -    -    -    -    -    -    -