UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2022

☐ 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.

☒ 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).

☒ 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	☒	Smaller Reporting Company	☒
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 ☒ No

The number of shares outstanding of the Issuer’s common stock as of May 13, 2022 was 8,788,098.

TABLE OF CONTENTS

	Page

PART I - FINANCIAL INFORMATION	3

Item 1. Unaudited Financial Statements	3

Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3

Consolidated Statements of Operations for the Three months Ended March 31, 2022 and 2021	4

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	5

Consolidated Statements of Changes in Stockholders’ Deficit for the Three Months Ended March 31, 2022 and 2021	6

Notes to Unaudited Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3. Quantitative and Qualitative Disclosure About Market Risk	30

Item 4. Controls and Procedures	30

PART II - OTHER INFORMATION	31

Item 1. Legal Proceedings	31

Item 1A. Risk Factors	31

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3. Defaults Upon Senior Securities	32

Item 4. Mine Safety Disclosures	32

Item 5. Other Information	32

Item 6. Exhibits	33

SIGNATURES	34

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31, 2022			December 31, 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	118,803		$	132,311
Accounts receivable		291,846			154,746
Inventories, net of $342,496 reserve at March 31, 2022 and December 31, 2021		1,360,539			1,147,554
Prepaid expenses and other current assets		184,936			422,617
Total current assets		1,956,124			1,857,228
Investment in equity securities		79,114			59,976
Property and equipment, net		103,520			115,846
Right of use asset leases		369,006			395,565
Intangible assets, net		382,211			403,846
TOTAL ASSETS	$	2,889,975		$	2,832,461
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable	$	665,228		$	527,924
Accrued employee compensation		170,212			117,680
Accrued professional fees and other		2,133,392			1,955,672
Other current liabilities		8,304,648			7,757,217
Deferred revenue		45,806			37,124
Convertible debt, net of unamortized discounts of $813,478 and $1,536,649, respectively		14,290,657			12,839,813
Other debt, net of unamortized discounts of $11,670 and $0, respectively		1,311,495			1,256,840
Operating lease liability		135,810			132,996
Other related party debt		195,250			-
Total current liabilities		27,252,498			24,625,266
LONG TERM LIABILITIES
Long term debt		150,000			150,000
Operating lease liability – long term		233,196			262,569
Deferred revenue		2,592			3,587
TOTAL LIABILITIES		27,638,286			25,041,422
COMMITMENTS AND CONTINGENCIES (Note 4)		-			-
STOCKHOLDERS’ DEFICIT
Series D Convertible Preferred Stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on March 31, 2022 and December 31, 2021, 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 March 31, 2022 and December 31, 2021, respectively		806			806
Series H Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 10,000 shares issued and outstanding on March 31, 2022 and December 31, 2021, respectively		100			100
Series H2 Convertible Preferred Stock, $.01 par value; 21 shares authorized; 21 shares issued and outstanding on March 31, 2022 and December 31, 2021, respectively		-			-
Series J Convertible Preferred Stock, $.01 par value; 6,250 shares authorized; 3,458 shares issued and outstanding on March 31, 2022 and December 31, 2021, respectively		35			35
Series K Convertible Preferred Stock, $.01 par value; 15,000 shares authorized; 6,880 shares issued and outstanding on March 31, 2022 and December 31, 2021, respectively		68			68
Series AA Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 8,649 shares issued and outstanding on March 31, 2022 and December 31, 2021, respectively		87			87
Preferred Stock		87			87
Common stock, $.01 par value; 100,000,000 shares authorized; 10,194,136 and 9,120,526 shares issued and outstanding on March 31, 2022 and December 31, 2021 respectively		101,942			91,206
Warrants to acquire common stock		31,974,888			31,715,154
Additional paid-in capital		63,867,846			64,261,048
Accumulated deficit		(120,694,086	)		(118,277,468	)
Total stockholders’ deficit		(24,748,311	)		(22,208,961	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	2,889,975		$	2,832,461

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

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	2022			2021
	For the Three Months Ended March 31,
	2022			2021
Revenue:
Products, services, other	$	480,000		$	559,874
Total revenue		480,000			559,874

Costs and expenses:
Cost of products and services		314,363			226,275
Research and development		281,589			299,943
Selling and marketing		66,462			93,328
General and administrative		903,885			1,015,430
Total operating costs and expenses		1,566,299			1,634,976

Operating loss		(1,086,299	)		(1,075,102	)

Other (expense) income:
Interest expense, net		(2,579,161	)		(4,668,064	)
Unrealized (loss) gain on investment in equity securities		19,138			(107,903	)
Loss on extinguishment of liabilities		(589,850	)		(725,159	)
Other income (expense)		(3,513	)		(1,359	)
Total other expense		(3,153,386	)		(5,502,485	)

Net loss		(4,239,685	)		(6,577,587	)
Deemed dividends on beneficial conversion feature		-			(57,884	)
Preferred stock dividends		(432,149	)		(403,215	)
Net loss attributable to common stockholders	$	(4,671,834	)	$	(7,038,686	)
Basic and diluted net loss per share attributable to common stockholders	$	(0.48	)	$	(1.45	)

Weighted average common stock shares outstanding used in the basic and diluted net loss per share calculation		9,695,189			4,865,826

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

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	2022			2021
	For the Three Months Ended
	March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,239,685	)	$	(6,577,587	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on loan forgiveness		(10,000	)		(367,039	)
Non-cash lease expense		26,559			15,576
Common stock and warrants issued for interest and extension fees		1,173,458			2,622,078
Depreciation and amortization		35,096			27,190
Accretion of interest and amortization of debt discount		817,877			2,165,780
Loss on extinguishment of accrued liabilities and debt		589,570			-
Stock-based compensation expense		64,483			61,237
(Gain) loss on investment in equity securities		(19,138	)		107,903
Common stock and warrants issued for services		117,461			238,512
Changes in operating assets and liabilities:
Accounts receivable		(137,100	)		(373,268	)
Inventories		(212,985	)		33,402
Prepaid expenses and other assets		237,681			43,291
Accounts payable		137,304			(60,613	)
Accrued employee compensation		52,532			42,702
Operating lease liability		(26,559	)		(15,576	)
Deferred revenue and other accrued expenses		637,164			799,397
Net cash used in operating activities		(756,282	)		(1,237,015	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property plant and equipment		(1,135	)		(3,962	)
Net cash used in investing activities		(1,135	)		(3,962	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from Series AA Convertible Preferred Stock		-			100,000
Proceeds from stock option exercises		-			14,773
Net proceeds from convertible debt		806,000			730,000
Net proceeds from non-convertible debt – third party		351,150			854,538
Net proceeds from non-convertible debt – related party		195,250			85,000
Payments on convertible debt		(324,350	)		(191,250	)
Payments on non-convertible debt – related party		-			(70,000	)
Payments on non-convertible debt		(284,141	)		(250,094	)
Net cash provided by financing activities		743,909			1,272,967

NET INCREASE IN CASH AND CASH EQUIVALENTS		(13,508	)		31,990
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		132,311			18,540
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	118,803		$	50,530

SUPPLEMENTAL INFORMATION
Interest paid in cash	$	120,436		$	37,375
NON CASH TRANSACTIONS:
Common stock issued with debt		142,480			-
Discount from warrants issued with debt		87,436			162,654
Common stock issued in lieu of cash for dividend		64,256			-
Early adoption of ASU 2020-06		473,027			-
Preferred stock dividends		432,149			403,215
Conversion of debt and interest into common stock		350,500			118,000
Discount due to beneficial conversion feature		-			53,777
Deemed dividend - beneficial conversion feature		-			57,884

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

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)

	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Warrants		Capital			Deficit			Deficit
	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, 2021		300	$	3		80,570	$	806		10,000	$	100		21	$	-		3,458	$	35		6,880	$	68		8,649	$	87		9,120,526	$	91,206	$	31,715,154	$	64,261,048		$	(118,277,468	)	$	(22,208,961	)
Early adoption of ASU 2020-06		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		(2,728,243	)		2,255,216			(473,027	)
Stock-based compensation		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		64,483			-			64,483
Series AA Preferred Stock dividend		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-			(432,149	)		(432,149	)
Series AA Preferred Stock offering
Series AA Preferred Stock offering, shares
Beneficial conversion option on convertible preferred stock
Issuance of common stock for services		-		-		-		-		-		-		-		-		-		-		-		-		-		-		37,000		370		-		77,330			-			77,700
Issuance of common stock warrants for services		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		39,761		-			-			39,761
Warrants issued for debt extension		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		132,537		-			-			132,537
Common stock issued for debt extension		-		-		-		-		-		-		-		-		-		-		-		-		-		-		214,500		2,145		-		470,755			-			472,900
Conversion of debt and interest for common stock		-		-		-		-		-		-		-		-		-		-		-		-		-		-		140,200		1,402		-		349,098			-			350,500
Issuance of common stock for dividends paid-in-kind		-		-		-		-		-		-		-		-		-		-		-		-		-		-		31,810		318		-		63,938			-			64,256
Issuance of common stock for interest paid-in-kind		-		-		-		-		-		-		-		-		-		-		-		-		-		-		558,100		5,581		-		1,167,877			-			1,173,458
Stock issued with debt		-		-		-		-		-		-		-		-		-		-		-		-		-		-		92,000		920		-		141,560			-			142,480
Warrants issued with debt		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		87,436		-			-			87,436
Net loss		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-			(4,239,685	)		(4,239,685	)
BALANCE, March 31, 2022		300	$	3		80,570	$	806		10,000	$	100		21	$	-		3,458	$	35		6,880	$	68		8,649	$	87		10,194,136	$	101,942	$	31,974,888	$	63,867,846		$	(120,694,086	)	$	(24,748,311	)

	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, 2020		300	$	3		80,570	$	806		10,000	$	100		21	$	-		3,458	$	35		6,880	$	68		8,043		81		4,168,324	$	41,683	$	29,192,471	$	50,312,968		$	(96,465,807	)	$	(16,917,592	)
Stock-based compensation		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		61,237			-			61,237
Stock option exercise		-		-		-		-		-		-		-		-		-		-		-		-		-		-		21,411		214		-		14,559			-			14,773
Series AA Preferred Stock dividend		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-			(403,215	)		(403,215	)
Issuance of warrants for interest paid-in-kind		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		600,298		-			-			600,298
Issuance of common stock for services		-		-		-		-		-		-		-		-		-		-		-		-		-		-		112,400		1,124				237,388			-			238,512
Beneficial conversion feature on debt		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		53,777			-			53,777
Series AA Preferred Stock offering		-		-		-		-		-		-		-		-		-		-		-		-		40		-		-		-		49,884		50,116			-			100,000
Beneficial conversion option on convertible preferred stock		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		57,884			-			57,884
Deemed dividend on convertible preferred stock		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		(57,884	)		-			(57,884	)
Conversion of debt and interest for common stock		-		-		-		-		-		-		-		-		-		-		-		-		-		-		47,200		472		-		117,528			-			118,000
Issuance of common stock for interest paid in kind		-		-		-		-		-		-		-		-		-		-		-		-		-		-		922,372		9,224		-		2,012,556			-			2,021,780
Warrants issued with debt		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		162,654		-			-			162,654
Net loss		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-			(6,577,587	)		(6,577,587	)
BALANCE, March 31, 2021		300	$	3		80,570	$	806		10,000	$	100		21	$	-		3,458	$	35		6,880	$	68		8,083	$	81		5,271,707	$	52,717	$	30,005,307	$	52,860,129		$	(103,446,609	)	$	(20,527,363	)

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

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(UNAUDITED)

1) Business Overview, Liquidity and Management Plans

Pressure Biosciences, Inc. (“we”, “our”, “the Company”) develops and sells innovative, broadly enabling, high pressure-based platform technologies and related consumables for the worldwide life sciences, agriculture, food and beverage, and other key industries. Our solutions are based on the unique properties of both constant (i.e., static) and alternating (i.e., pressure cycling technology, or “PCT”) hydrostatic pressure. PCT is a patented enabling technology platform that uses alternating cycles of hydrostatic pressure between ambient and ultra-high levels to safely and reproducibly control bio-molecular interactions (e.g., cell lysis, biomolecule extraction). Historically, our primary focus has been in the development of PCT-based products for biomarker and target discovery, drug design and development, biotherapeutics characterization and quality control, soil & plant biology, forensics, and counter-bioterror applications. In more recent years, major new market opportunities have emerged in the use of our pressure-based technologies in the following areas: (1) the use of our recently acquired, patented technology from BaroFold, Inc. (the “BaroFold” technology) to allow entry into the bio-pharma contract services sector, and (2) the use of our recently-patented, scalable, high-efficiency, pressure-based Ultra Shear Technology (“UST”) platform to (i) create stable nanoemulsions of otherwise immiscible fluids (e.g., oils and water) and to (ii) prepare higher quality, homogenized, extended shelf-life or room temperature stable low-acid liquid foods that cannot be effectively preserved using existing non-thermal technologies.

On February 8, 2021, PBI announced plans to acquire the assets of a global eco-friendly agrochemical supplier. On April 14, 2021, PBI finalized terms and executed a new letter of intent to purchase the assets of the agrochemical supplier. This opportunity is attractive as it has the potential of readily producing significant revenue, as well as the potential to apply the UST technology to improve some of the product line. In July 2021, a newly-formed subsidiary of PBI, PBI Agrochem, leased a warehouse in Carson City, NV, and hired a warehouse manager.

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 losses from operations and negative cash flows from operations with respect to our pressure cycling technology business since our inception. As of March 31, 2022, 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 debt and equity capital in the past and as described in Notes 5 and 6. In addition we raised debt and equity capital after March 31, 2022 as described in Note 7. 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.

3) Summary of Significant Accounting Policies

Basis of Presentation

The unaudited interim financial statements of Pressure BioSciences, Inc. and its consolidated subsidiaries (collectively, the “Company”) included herein have been prepared by the Company in accordance with the instructions to Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission. Under these rules and regulations, some information and footnote disclosures normally included in financial statements prepared under accounting principles generally accepted in the United States of America have been shortened or omitted. Management believes that all adjustments necessary for a fair statement of the financial position and the results of operations for the periods shown have been made. All adjustments are normal and recurring. These financial statements should be read together with the Company’s audited financial statements included in its Form 10-K for the fiscal year ended December 31, 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2022.

Use of Estimates

The Company’s consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates, judgements and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Global concerns about the COVID-19 pandemic have adversely affected, and we expect will continue to adversely affect, our business, financial condition and results of operations including the estimates and assumptions made by management. Significant estimates and assumptions include valuations of share-based awards, investments in equity securities and intangible asset impairment. Actual results could differ from the estimates, and such differences may be material to the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes the beneficial conversion separation model for convertible debt. As a result, after adopting the guidance, entities will no longer account for beneficial conversion features in equity. The guidance is effective for public business entities, other than small reporting companies financial statements starting January 1, 2022, with early adoption permitted. The Company is a small reporting company and early adopted the new guidance on January 1, 2022 using the modified retrospective approach and recorded a cumulative effect of adoption equal to a $2,728,243 decrease in additional paid in capital and a $2,255,216 decrease in accumulated deficit. There is no expected material impact to the Company’s statements of operations or cash flows as the result of the adoption of ASU 2020-06.

Principles of Consolidation

The consolidated financial statements include the accounts of Pressure BioSciences, Inc., and its wholly owned subsidiaries PBI BioSeq, Inc and PBI Agrochem, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

We recognize revenue in accordance with FASB 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, we will send a highly trained technical representative to the customer site to install Barocyclers® 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.

Revenue from scientific services customers is recognized upon completion of each stage of service as defined in service agreements.

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 recognize revenue for non-cash transactions at recorded cost or carrying value of the assets or services sold.

We account for lease agreements of our instruments in accordance with ASC 842, Leases. 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.

Deferred revenue represents amounts received from 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.

Disaggregation of revenue

In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.

Schedule of Disaggregation of Revenue

In thousands of US dollars ($)	Three Months Ended March 31,
Primary geographical markets	2022		2021
North America	$	318	$	208
Europe		46		84
Asia		116		268
	$	480	$	560

	Three Months Ended March 31,
Major products/services lines	2022		2021
Hardware	$	284	$	377
Consumables		40		102
Contract research services		15		6
Sample preparation accessories		31		29
Agrochem products		83		-
Technical support/extended service contracts		17		24
Shipping and handling		10		19
Other		-		3
	$	480	$	560

	Three Months Ended March 31,
Timing of revenue recognition	2022		2021
Products transferred at a point in time	$	448	$	538
Services transferred over time		32		22
	$	480	$	560

Contract balances

Schedule of Contract Balances

In thousands of US dollars ($)

March 31,

2022

December 31,

2021

Receivables, which are included in ‘Accounts Receivable’

292

155

Contract liabilities (deferred revenue)

Transaction price allocated to the remaining performance obligations.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.

In thousands of US dollars ($)		2022				2023				Total
Extended warranty service		$	46			$	3			$	49

All consideration from contracts with customers is included in the amounts presented above.

Contract Costs

The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in selling, general, and administrative expenses. The costs to obtain a contract are recorded immediately in the period when the revenue is recognized either upon shipment or installation. The costs to obtain a service contract are considered immaterial when spread over the life of the contract so the Company records the costs immediately upon billing.

Concentrations

Credit Risk

Our financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash, cash equivalents, and trade receivables. We have cash investment policies which, among other things, limit investments to investment-grade securities. We perform ongoing credit evaluations of our customers, and the risk with respect to trade receivables is further mitigated by the fact that many of our customers are government institutions, large pharmaceutical and biotechnology companies, and academic laboratories.

The following table illustrates the level of concentration as a percentage of total revenues during the three months ended March 31, 2022 and 2021.

	For the Three Months Ended
	March 31,
	2022			2021
Top Five Customers		73	%		88	%
Federal Agencies		0	%		1	%

The following table illustrates the level of concentration as a percentage of net accounts receivable balance as of March 31, 2022 and December 31, 2021. The Top Five Customers category may include federal agency receivable balances if applicable.

	March 31, 2022			December 31, 2021
Top Five Customers		88	%		82	%
Federal Agencies		3	%		5	%

Product Supply

In recent years we utilized a contract assembler for our Barocycler® 2320EXT. They provided us with precision manufacturing services that included management support services to meet our specific application and operational requirements. Among the services provided to us were:

	●	CNC Machining

	●	Contract Assembly & Kitting

	●	Component and Subassembly Design

	●	Inventory Management

	●	ISO certification

Beginning in July 2021, we brought the assembly of our Barocycler 2320EXT instruments in-house. This became necessary when our independent contract assembler (CBM Industries) informed us that they were about to need 100% of their assembly space for one of their customers, who was in fact one of the largest life science instrument manufacturers in the U.S. We worked with our notified body to gain approval to use both the CE and CSA marks on the instrument, which we received during Q3 2021. Until further notice, we expect to continue to assemble our Barocycler 2320EXT instrument at our South Easton, MA location.

We currently manufacture and assemble the Barocycler®, HUB440, HUB880, the SHREDDER SG3, and most of our consumables at our South Easton, MA facility. We will regularly reassess the tradeoffs between in-house assembly versus the benefits of outsourced relationships for of the entire Barocycler® product line, and future instruments.

Investment in Equity Securities

As of March 31, 2022, we held 100,250 shares of common stock of Nexity Global SA, (a Polish publicly traded company).

We account for this investment in accordance with ASC 320 “Investments — Debt and Equity Securities”. ASC 320 requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income.

As of March 31, 2022, our consolidated balance sheet reflected the fair value, determined on a recurring basis based on Level 1 inputs of our investment in Nexity, to be $79,114. We recorded $19,138 as an unrealized gain during the three months ended March 31, 2022 for changes in market value.

Computation of Loss per Share

Basic loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding. Diluted loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For purposes of this calculation, convertible preferred stock, common stock dividends, and warrants and options to acquire common stock, are all considered common stock equivalents in periods in which they have a dilutive effect and are excluded from this calculation in periods in which these are anti-dilutive to our net loss.

The following table illustrates our computation of loss per share for the three months ended March 31, 2022 and 2021:

	2022			2021
	For the Three Months Ended
	March 31,
	2022			2021
Numerator:
Net loss attributable to common stockholders	$	(4,671,834	)	$	(7,038,686	)

Denominator for basic and diluted loss per share:
Weighted average common stock shares outstanding		9,695,189			4,865,826

Loss per common share – basic and diluted	$	(0.48	)	$	(1.45	)

The following table presents securities that could potentially dilute basic loss per share in the future. For all periods presented, the potentially dilutive securities were not included in the computation of diluted loss per share because these securities would have been anti-dilutive to our net loss. The Series D Convertible Preferred Stock, Series G Convertible Preferred Stock, Series H and H2 Convertible Preferred Stock, Series J Convertible Preferred Stock, Series K Convertible Preferred Stock, and Series AA Convertible Preferred Stock are presented below as if they were converted into common shares according to the conversion terms.

	As of March 31,
	2022		2021
Stock options		1,307,822		1,358,490
Convertible debt		5,668,816		4,757,701
Common stock warrants		16,350,438		14,901,211
Convertible preferred stock:
Series D Convertible Preferred Stock		25,000		25,000
Series G Convertible Preferred Stock		26,857		26,857
Series H Convertible Preferred Stock		33,334		33,334
Series H2 Convertible Preferred Stock		70,000		70,000
Series J Convertible Preferred Stock		115,267		115,267
Series K Convertible Preferred Stock		229,334		229,334
Series AA Convertible Preferred Stock		8,649,000		8,083,000
		32,475,868		29,600,194

Accounting for Stock-Based Compensation Expense

We maintain equity compensation plans under which incentive stock options and non-qualified stock options are granted to employees, independent members of our Board of Directors and outside consultants. We recognize stock-based compensation expense over the requisite service period using the Black-Scholes formula to estimate the fair value of the stock options on the date of grant.

Determining Fair Value of Stock Option Grants

Valuation and Amortization Method - The fair value of each option award is estimated on the date of grant using the Black-Scholes pricing model based on certain assumptions. The estimated fair value of employee stock options is amortized to expense using the straight-line method over the vesting period.

Expected Term - The Company uses the simplified calculation of expected life, as the Company does not currently have sufficient historical exercise data on which to base an estimate of expected term. Using this method, the expected term is determined using the average of the vesting period and the contractual life of the stock options granted.

Expected Volatility - Expected volatility is based on the Company’s historical stock volatility data over the expected term of the award.

Risk-Free Interest Rate - The Company bases the risk-free interest rate used in the Black-Scholes valuation method on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term.

Forfeitures - The Company records stock-based compensation expense only for those awards that are expected to vest. The Company estimated a forfeiture rate of 5% for awards granted based on historical experience and future expectations of options vesting. The Company used this historical rate as our assumption in calculating future stock-based compensation expense.

The Company recognized stock-based compensation expense of $64,483 and $61,237 for the three months ended March 31, 2022 and 2021, respectively. The following table summarizes the effect of this stock-based compensation expense within each of the line items of our costs and expenses within our Consolidated Statements of Operations:

	For the Three Months Ended
	March 31,
	2022		2021
Cost of sales	$	4,349	$	5,053
Research and development		18,909		25,862
Selling and marketing		9,050		4,595
General and administrative		32,175		25,727
Total stock-based compensation expense	$	64,483	$	61,237

Fair Value of Financial Instruments

Due to their short maturities, the carrying amounts for cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and debt approximate their fair value. The carrying amount of long-term debt approximates fair value due to interest rates that approximate prevailing market rates.

Fair Value Measurements

The Company follows the guidance of FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) as it related to all financial assets and financial liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.

The Company generally defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions. A slight change in an unobservable input like volatility could have a significant impact on fair value measurement.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company has determined that its financial assets are classified within Level 1 in the fair value hierarchy. The development of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management.

The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2022:

			Fair value measurements at March 31, 2022 using:
	March 31, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Equity Securities	$	79,114	$	79,114		-		-
Total Financial Assets	$	79,114	$	79,114	$	-	$	-

The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2021: