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)

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2017 and 2016.

	For the Three Months Ended
	June 30,
	2017			2016
Top Five Customers		60	%		68	%
Federal Agencies		11	%		8	%

	For the Six Months Ended
	June 30,
	2017			2016
Top Five Customers		42	%		40	%
Federal Agencies		8	%		10	%

The following table illustrates the level of concentration as a percentage of net accounts receivable balance as of June 30, 2017 and December 31, 2016:

	June 30, 2017			December, 31, 2016
Top Five Customers		66	%		82	%
Federal Agencies		0	%		1	%

Summary of Computation of Loss per Share

The following table illustrates our computation of loss per share for the three months and six months ended June 30, 2017 and 2016:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Numerator:
Net loss	$	(583,760	)	$	961,829		$	(6,178,275	)	$	(4,988,561	)
Accretion of interest and amortization of debt discount		-			991,286			-			-
Change in fair value of derivative liabilities		-			(2,016,593	)		-			-
Net loss applicable to common shareholders	$	(583,760	)	$	(63,478	)	$	(6,178,275	)	$	(4,988,561	)

Denominator for basic and diluted loss per share:
Weighted average common stock shares outstanding		1,077,529			865,128			1,059,250			816,035

Net effect of dilutive common stock equivalents		-			1,493,626			-			-

Weighted average shares outstanding - diluted		1,077,529			2,358,754			1,059,250			816,035

Income (loss) per common share - basic	$	(0.54	)	$	1.11		$	(5.83	)	$	(6.11	)

Income (loss) per common share - diluted	$	(0.54	)	$	(0.03	)	$	(5.83	)	$	(6.11	)

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 and H2 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.

	As of June 30,
	2017		2016
Stock options		250,109		179,508
Convertible debt		827,560		844,795
Common stock warrants		890,047		880,111
Convertible preferred stock:
Series D Convertible Preferred Stock		25,000		25,000
Series G Convertible Preferred Stock		28,857		28,857
Series H Convertible Preferred Stock		33,334		33,334
Series H2 Convertible Preferred Stock		70,000		70,000
Series J Convertible Preferred Stock		117,367		118,200
Series K Convertible Preferred Stock		227,200		227,200
		2,469,474		2,407,005

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				For the Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Research and development	$	22,949	$	15,650	$	38,918	$	36,031
Selling and marketing		13,447		9,803		24,334		22,493
General and administrative		68,586		65,396		116,259		133,787
Total stock-based compensation expense	$	104,982	$	90,849	$	179,511	$	192,311

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 June 30, 2017:

			Fair value measurements at June 30, 2017 using:
	June 30, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Available-For-Sale Equity Securities		25,986		25,986		-		-
Total Financial Assets	$	25,986	$	25,986	$	-	$	-

	June 30, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Warrants Issued with Convertible Debt	$	1,950,681		-		-	$	1,950,681
Conversion Option Derivative Liabilities		907,386		-		-		907,386
Total Derivatives	$	2,858,067	$	-	$	-	$	2,858,067

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 six months ended June 30, 2017:

	December 31, 2016		Issuance fair value		Change in fair value			Settlement			June 30, 2017
Series D Preferred Stock Purchase Warrants	$	23,313	$	-	$	26,014		$	(49,327	)	$	-
Warrants Issued with Convertible Debt		1,661,795		-		288,886			-			1,950,681
Conversion Option Derivative Liabilities		951,059		-		(43,673	)		-			907,386
Total Derivatives	$	2,636,167	$	-	$	271,227		$	(49,327	)	$	2,858,067

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 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 June 30, 2017
Expected life (in months)		60.0			43.0-51.0			36.0-45.0
Expected volatility		118.3-120.1	%		110.0-116.0	%		104.1-108.5	%
Risk-free interest rate		1.48-1.69	%		1.93	%		1.50	%
Exercise price	$	12.00		$	12.00		$	12.00
Fair value per warrant	$	5.70-$6.30		$	3.60-4.20		$	4.16-4.77

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 June 30, 2017
Expected life (in months)		6.0-24.0			0-18.0			6.0-15.0			1.0-9.0
Expected volatility		104.2-153.8	%		86.9%-142.2	%		84.4-94.8	%		88.2-104.3	%
Risk-free interest rate		0.05-0.99	%		0.01-0.72	%		0.62-0.85	%		0.84-1.24	%
Exercise price	$	3.00-$10.50		$	3.00-$7.50		$	8.40		$	8.40
Fair value per conversion option	$	2.70-$8.40		$	2.10-$7.80		$	0.90-$1.80		$	0.28-$2.14

- 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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