7) Subsequent Events

From October 1, 2023, through November 10, 2023, the Company issued seven (7) convertible loan with a principal balance of $439,000. The terms of the convertible notes were 15 days to 12 months with interest rates of 10-120% and convertible into the Company’s common stock at a fixed rate of $2.50 per share. In this time the Company also issued 278,500 shares of common stock for new convertible debt loans in the third quarter, 455,350 shares of common stock for accrued interest paid-in-kind, 310,000 shares of common stock for debt extensions, 505,000 shares of common stock from the conversion of Series BB preferred stock, 145,809 shares of common stock for Series AA preferred dividends and 40 Series BB preferred stock for professional services.

On October 18, 2023, the Board of Directors (the “Board”) of Pressure BioSciences, Inc. (the “Company”) approved an amendment (the “Amendment”) to the Pressure BioSciences, Inc. 2021 Equity Incentive Plan (the “Plan”). The Plan originally provided that no one person could be granted awards pursuant to the Plan during any one fiscal year to purchase more than 300,000 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”). Pursuant to the amendment, the yearly limit for any one person was raised to 500,000 shares of Common Stock.

On the same date, the Board granted a total of 1,500,000 stock options to a number of employees, consultants and the four members of the Board with each option having an exercise price of $0.25 per share. Each award of options expires on October 18, 2033. The options for the members of the Board vest in equal amounts over twelve (12) months. The options for Mr. Schumacher and Drs. Ting and Lazarev were each vested 25% on the date of issuance and 25% of the options vest each year for the next three (3) years.

In addition, on the same date, the Board approved the repricing of all outstanding options (including those held by the Board members and the named executive officers) to $0.25. The previous exercise prices of the outstanding stock options held by the Board members and the named executive officers ranged from $0.69 to $1.50.

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, forward-looking statements are identified by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. Such statements include, without limitation, statements regarding:

These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements, expressed or implied, by such forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations or any change in events, conditions or circumstances on which any of our forward-looking statements are based. Factors that could cause or contribute to differences in our future financial and other results include those discussed in the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 and in this Report. We qualify all of our forward-looking statements by these cautionary statements.

Pressure BioSciences, Inc. (OTCQB: PBIO) (the “Company”) is a leader in the development & sale of innovative, enabling, high pressure technology-based instruments, consumables, and services for the life sciences and other industries worldwide. Our products/services are based on three patented, high-pressure platforms: (i) Ultra Shear Technology™ (“UltraShear™” or “UST™”), (ii) BaroFold Technology™ (“BaroFold™”), and (iii) Pressure Cycling Technology™ (“PCT™”)

The Company was founded on the belief that its PCT platform had the potential to significantly increase the quality of sample preparation in both research and clinical settings. This premise has been well proven and PBI has been successful in installing its PCT platform in the laboratories of key opinion leaders worldwide. Although developed subsequently, the Company now assesses that the commercial potential for its UST platform across diverse multi-billion dollar markets far exceeds the potential of the PCT platform. Consequently, in January 2022, PBI made the critical strategy decision to immediately shift its primary business focus from PCT to its innovative UST Platform.

The UST Platform (8 issued patents) is based on the use of intense shear forces from ultra-high pressure discharge (greater than 20,000 psi) through a dynamically-controlled nano-gap valve under precisely controlled temperatures. UST has been shown to turn hydrophobic (water-repelling) oil-based supplements (e.g., CBD, curcumin, astaxanthin), therapeutics (e.g., prednisone), and other active ingredients (e.g., retinol) into long-term stable, effectively water-soluble, highly bioavailable, oil-in-water nanoemulsion formulations. The Company began early commercial introduction of the UST Platform in May 2022, and executed agreements were subsequently announced with three CBD companies and one cosmeceutical/skincare company for commercialization in Q4 2022.

The BaroFold Platform (14 issued patents) can be used to significantly improve the quality and production costs of protein biotherapeutics. It employs high-pressure manipulations for the disaggregation, unfolding and controlled refolding of proteins to their desired native structures at yields and efficiencies not achievable using existing technologies. The BaroFold Platform has been shown to remove protein aggregates in biotherapeutic drug manufacturing, thereby improving product efficacy, safety, and cost for both new-drug entities and biosimilar (follow-on biologic) products. It is scalable and practical for standard manufacturing processes.

The PCT Platform (17 issued patents) uses alternating cycles of hydrostatic pressure between ambient and ultra-high pressures to control bio-molecular interactions safely and reproducibly in sample preparation (e.g., the critical steps performed by tens of thousands of scientists worldwide prior to analytical measurements, such as cell lysis and biomolecule extraction from tissue samples). Our focus for PCT is on making our, GMP-compliant, next generation PCT-based Barocycler EXTREME system available globally to biopharmaceutical drug manufacturers for use in the design, development, characterization, and quality control of biotherapeutic drugs. We currently have over 350 PCT Systems placed in approximately 225 academic, government, pharmaceutical, and biotech research laboratories worldwide. There are currently over 200 independent publications highlighting the advantages of using the PCT Platform in scientific research & clinical laboratories.

2023 Key Accomplishments

From January 1, 2023 to September 30, 2023, we announced the following key accomplishments:

Results of Operations

The following disclosure compares the results of operations for the quarter ended September 30, 2023 (“Q2 2023”) with September 30, 2022 (“Q2 2022”) and compares the nine months ended September 30, 2023 with September 30, 2022.

Products and Services Revenue

We recognized total revenue of $413,009 for Q3 2023 compared to $144,032 for Q3 2022, a 187% increase. For the year-to-date periods ending September 30, 2023 and September 30, 2022, we recognized revenue of $1,665,412 and $1,122,169 respectively, a 48% increase.

This increase in revenue was primarily attributable to a $506,828 increase in PCT instrumentation and consumable sales, a $30,295 increase in technical support services and an $87,378 increase in Agrochem products, offset by a decrease of $89,350 in scientific services.

Cost of Products and Services

The cost of products and services was $229,457 for Q3 2023 compared to $126,203 for Q3 2022. For the year-to-date periods ending September 30, 2023 and September 30, 2022 our cost of products and services were $844,684 and $742,707, respectively. Gross profit margin on products and services increased to 49% in the year-to-date period ended September 30, 2023 from 34% in the same period ended September 30, 2022. The increase in gross profit margin was attributable to $180,670 of Agrochem products sold in 2023 at no cost due to 2022 inventory write-off and a $79,901 instrument non-monetary exchange sale in 2022 was recorded at no profit.

Research and Development

Research and development expenses were $288,345 for Q3 2023 compared to $262,370 for Q3 2022. For the year-to-date periods ending September 30, 2023 and September 30, 2022, these expenses were $1,004,437 and $716,685, respectively, a 40% increase. The reported increase was due to a $71,777 reclass of salaries to COGS for a non-monetary instrument exchange in 2022 and $241,585 of stock-based compensation expense for employee stock options issued in 2023.

Selling and Marketing

Selling and marketing expenses were $157,773 for Q3 2023 compared to $226,526 for Q3 2022. For the year-to-date periods ending September 30, 2023 and September 30, 2022, these expenses were $537,802 and $422,422, respectively a 27% increase The reported increase was primarily attributable to the hiring of a Marketing FTE in Q2 2023 and $102,675 of stock-based compensation expense for employee stock options issued in 2023.

General and Administrative

General and administrative expenses were $1,030,244 for Q3 2023 compared to $892,293 for Q3 2022. For the year-to-date periods ending September 30, 2023 and September 30, 2022, these expenses were $5,290,564 and $2,591,644, respectively, a 104% increase. The increase was primarily due to approximately $2.0  million common stock and warrants issued for services, approximately $1.3 million of stock-based compensation expense for employee, BOD and financial consultant stock options issued in 2023, and approximately $132,000 of financial consulting expenses in 2023, offset by an approximately $423,000 decrease in IR expenses.

Operating Loss

Operating loss was $1,292,809 for Q3 2023 compared to $1,363,360 for Q3 2022. For the year-to-date periods ending September 30, 2023 and September 30, 2022, the operating loss was $6,012,075 and $3,551,289 respectively, a 79% increase. This increase was primarily due to $2.0 millions in common stock and warrants issued for services and $1.7 million of stock-based compensation expense for employee, BOD financial consultant stock options issued in 2023, offset by an approximate $423,000 decrease in IR expenses.

Interest Expense, net

Interest expense was $4,338,759 for Q3 2023 compared to $2,034,021 for Q3 2022. For the year-to-date periods ending September 30, 2023 and September 30, 2022, these expenses were $14,112,098 and $6,448,771, respectively, a 119% increase. This increase was attributable to an increase in convertible debt and merchant cash loans, in addition to stock issuances for interest paid in kind and stock issued for debt extensions.

Unrealized gain on investment in equity securities

Unrealized loss on investments in equity securities was $5,965 for Q3 2023 compared to an unrealized loss of $8,675 for Q3 2022. For the nine months ended September 30, 2023, the unrealized gain on investment in equity securities was $14,280 as compared to an unrealized loss of $8,047 for the nine months ended September 30, 2022. The reported change was attributable to movement in the market price of the Company’s investment in Nexity.

Loss on extinguishment of liabilities

In connection with debt extensions and forgiveness, we recognized a net gain of $0 for Q3 2023 compared to $1,054,122 of losses for Q3 2022. For the nine months ended September 30, 2023 the recognized net gain of $687,591 as compared to a net loss of $1,809,249 for the nine months ended September 30, 2022. The increase/decline in gains/losses was attributable to decreased extension and forgiveness activity.

Net loss attributable to common stockholders

Net loss attributable to common stockholders was $6,261,999 ($0.29 per share) for Q3 2023 compared to $4,893,946 ($0.44 per share) for Q3 2022. For the nine months ended September 30, 2023, the net loss attributable to common stock was $24,666,565 ($1.21 per share) as compared to $12,913,826 ($1.24 per share).

Liquidity and Financial Condition

We have experienced negative cash flows from operations since our inception. As of September 30, 2023, we did not have adequate working capital resources to satisfy our current liabilities and as a result, we have substantial doubt regarding our ability to continue as a going concern. As described in Notes 5 and 6 of the accompanying consolidated financial statements, we have been successful in raising debt and equity capital. We received approximately $6.5 million  in net proceeds from loans in the nine months ended September 30, 2023. We have efforts in place to continue to raise cash through debt and equity offerings. (See Note 7 to the financial statements)

We will need substantial additional capital to fund our operations in future periods. If we are unable to obtain financing on acceptable terms, or at all, we will likely be required to cease our operations, pursue a plan to sell our operating assets, or otherwise modify our business strategy, which could materially harm our future business prospects.

Net cash used in operations for the nine months ended September 30, 2023 was $2,053,823  as compared to $3,051,257 for the nine months ended September 30, 2022.

Net cash used in investing activities for the nine months ended September 30, 2023 was $7,495 compared to $20,754 in the nine months ended September 30, 2022.

Net cash provided by financing activities for the nine months ended September 30, 2023 was $2,062,716 as compared to $3,170,580 for the nine months ended September 30, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This Item 3 is not applicable to us as a smaller reporting company and has been omitted.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 filings are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of September 30, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective.

Our conclusion that our disclosure controls and procedures were not effective as of September 30, 2023 is due to the continued presence of the material weaknesses in our internal control over financial reporting identified in our Annual Report on Form 10-K for the year ended December 31, 2022. These material weaknesses are the following:

We continue to plan to remediate those material weaknesses as follows:

During the period covered by this Report, we implemented and performed additional substantive procedures, such as supervisory review of work papers and consistent use of financial models used in equity valuations, to ensure our consolidated financial statements as of and for the six-month period ended September 30, 2023, are fairly stated in all material respects in accordance with GAAP. We have not, however, been able to fully remediate the material weaknesses due to our limited financial resources. Our remediation efforts are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Except as described above, there have been no changes in our internal controls over financial reporting that occurred during the period ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

Factors that could cause or contribute to differences in our future financial and operating results include those discussed in the risk factors set forth in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2022 and, in this Item, 1A. The risks described in our Form 10-K and this Report are not the only risks that we face. Additional risks not presently known to us or that we do not currently consider significant may also have an adverse effect on the Company. If any of the risks occur, our business, results of operations, cash flows or financial condition could suffer.

There have been no material changes to the risk factors set forth in Item 1A of our 10-K for the year ended December 31, 2022.

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

Except where noted, all the securities discussed in this Part II, Item 2 were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act.

On various dates in the nine months ended September 30, 2023 the Company issued a total of 9,917,035  of its common shares, 953 shares of Series BB preferred stock and 401 shares of Series CC preferred stock as follows:

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

* Filed herewith.

** In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.