Pressure BioSciences, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies (Tables)

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Summary of Customer Concentration Risk Percentage

The following table illustrates the level of concentration as a percentage of total revenues during the three months ended March 31, 2017 and 2016.

	For the Three Months Ended
	March 31,
	2017			2016
Top Five Customers		61	%		46	%
Federal Agencies		5	%		11	%

The following table illustrates the level of concentration as a percentage of net accounts receivable balance as of March 31, 2017 and December 31, 2016:

	March 31, 2017			December, 31, 2016
Top Five Customers		66	%		82	%
Federal Agencies		1	%		1	%

Summary of Computation of Loss per Share

The following table illustrates our computation of loss per share for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended
	March 31,
	2017			2016
Numerator:
Net loss	$	(5,594,515	)	$	(5,950,391	)

Denominator for basic and diluted loss per share:
Weighted average common stock shares outstanding		31,223,061			23,198,360

Loss per common share - basic and diluted	$	(0.18	)	$	(0.26	)

Summary of Anti-dilutive Securities Excluded from Computation of Earnings per Share

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 Convertible Preferred Stock, Series J Convertible Preferred Stock and Series K Convertible Preferred Stock are presented below as if they were converted into common shares according to the conversion terms.

	For the Three Months Ended
	March 31,
	2017		2016
Stock options		7,814,250		5,460,250
Convertible debt		26,067,288		25,226,800
Common stock warrants		25,399,195		26,998,401
Convertible preferred stock:
Series D Convertible Preferred Stock		750,000		750,000
Series G Convertible Preferred Stock		865,700		865,700
Series H Convertible Preferred Stock		1,000,000		1,000,000
Series H2 Convertible Preferred Stock		2,100,000		2,100,000
Series J Convertible Preferred Stock		3,521,000		3,546,000
Series K Convertible Preferred Stock		6,816,000		11,416,000
		74,333,433		77,363,151

Summary of Stock Based Compensation Expense

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,
	2017		2016
Research and development	$	15,970	$	20,381
Selling and marketing		10,886		12,690
General and administrative		47,673		68,391
Total stock-based compensation expense	$	74,529	$	101,462

Schedule of Liabilities Measured at Fair Value on Recurring Basis

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, 2017:

			Fair value measurements at March 31, 2017 using:
	March 31, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Available-For-Sale Equity Securities		19,796		19,796		-		-
Total Financial Assets	$	19,796	$	19,796	$	-	$	-

	March 31, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Series D Preferred Stock Purchase Warrants	$	89,280		-		-	$	89,280
Warrants Issued with Convertible Debt		2,929,235		-		-		2,929,235
Conversion Option Derivative Liabilities		2,679,404		-		-		2,679,404
Total Derivatives	$	5,697,919	$	-	$	-	$	5,697,919

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs for the three months ended March 31, 2017:

	December 31, 2016		Issuance fair value		Change in fair value		March 31, 2017
Series D Preferred Stock Purchase Warrants	$	23,313	$	-	$	65,967	$	89,280
Warrants Issued with Convertible Debt		1,661,795		-		1,267,440		2,929,235
Conversion Option Derivative Liabilities		951,059		-		1,728,345		2,679,404
Total Derivatives	$	2,636,167	$	-	$	3,061,752	$	5,697,919

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, 2016:

			Fair value measurements at December 31, 2016 using:
	December 31, 2016		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Available-For-Sale Equity Securities		25,865		25,865		-		-
Total Financial Assets	$	25,865	$	25,865	$	-	$	-

	December 31, 2016		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Series D Preferred Stock Purchase Warrants	$	23,313		-		-	$	23,313
Warrants Issued with Convertible Debt		1,661,795		-		-		1,661,795
Conversion Option Derivative Liabilities		951,059		-		-		951,059
Total Derivatives	$	2,636,167	$	-	$	-	$	2,636,167

Schedule of Fair Value Assumptions

The assumptions for the binomial pricing model are represented in the table below for the warrants issued in the Series D private placement reflected on a per share common stock equivalent basis.

Assumptions	November 10, 2011			Warrants revalued at December 31, 2016			Warrants revalued at March 31, 2017
Expected life (in months)		60.0			5.0			1.2
Expected volatility		104.5	%		83.5	%		98.3	%
Risk-free interest rate		0.875	%		0.62	%		0.74	%
Exercise price	$	0.81		$	0.25		$	0.25
Fair value per warrant	$	0.54		$	0.02		$	0.08

The assumptions for the binomial pricing model are represented in the table below for the warrants issued with the Convertible Debt throughout the period reflected on a per share common stock equivalent basis.

Assumptions	At Issuance Fair value		Warrants revalued at December 31, 2016			Warrants revalued at March 31, 2017
Expected life (in months)		60.0		43.0-51.0			40.0-48.0
Expected volatility		118.3-120.1 %		110.0-116.0 %			106.0-110.0 %
Risk-free interest rate		1.48-1.69 %		1.93	%		1.50	%
Exercise price	$	0.40	$	0.40		$	0.40
Fair value per warrant		$ 0.19-$0.21		$ 0.12-0.14			$ 0.21-0.23

The assumptions for the binomial pricing model are represented in the table below for the conversion options reflected on a per share common stock equivalent basis.

Assumptions	At Issuance fair value			At Settlement fair value			Conversion options revalued at December 31, 2016			Conversion options revalued at March 31, 2017
Expected life (in months)		6.0-24.0			0-18.0			6.0-15.0			4.0-12.0
Expected volatility		104.2-153.8	%		86.9%-142.2	%		84.4-94.8	%		90.2-109.3	%
Risk-free interest rate		0.05-0.99	%		0.01-0.72	%		0.62-0.85	%		0.91-1.03	%
Exercise price	$	0.10-$0.35		$	0.10-$0.25		$	0.28		$	0.28
Fair value per conversion option	$	0.09-$0.28		$	0.07-$0.26		$	0.03-$0.06		$	0.10-$0.13

- Definition

Tabular disclosure of all significant concentrations of risk, including credit risk and market risk, arising from all financial instruments (as defined), whether from an individual counterparty or groups of counterparties. The disclosure concerning concentrations of risk may consist of the following information: (1) for concentrations of credit risk disclosure may include: (a) information about the (shared) activity, region, or economic characteristic that identifies the concentration, (b) the maximum amount of loss due to credit risk that, based on the gross fair value of the financial instrument, the entity would incur if parties to the financial instruments that make up the concentration failed completely to perform according to the terms of the contracts and the collateral or other security, if any, for the amount due proved to be of no value to the entity, (c) the policy of requiring collateral or other security to support financial instruments subject to credit risk, information about the entity's access to that collateral or other security, and the nature and a brief description of the collateral or other security supporting those financial instruments, and (d) the policy of entering into master netting arrangements to mitigate the credit risk of financial instruments, information about the arrangements for which the entity is a party, and a brief description of the terms of those arrangements, including the extent to which they would reduce the entity's maximum amount of loss due to credit risk and (2) for disclosure of quantitative information about the market risks of financial instruments that is consistent with the way the company manages or adjusts those risks, disclosure may include: (a) more details about current positions and perhaps activity during the period, (b) the hypothetical effects on comprehensive income (or net assets), or annual income, of several possible changes in market prices, (c) a gap analysis of interest rate re-pricing or maturity dates, (d) the duration of the financial instruments, (e) the entity's value at risk from derivatives and from other positions at the end of the reporting period and the average value at risk during the year, or (f) other ways of reporting quantitative information as internally developed.

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