Quarterly Report (10-q)

Date : 12/13/2019 @ 10:03PM
Source : Edgar (US Regulatory)
Stock : Pressure Biosciences Inc (QB) (PBIO)
Quote : 2.15  -0.09 (-4.02%) @ 8:21PM

Quarterly Report (10-q)

 

 

 

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, 2019

 

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
None   None   None

 

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 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).

 

[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” “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 [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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of December 10, 2019.

 

Class     Number of Shares  
Common Stock, par value $.01 per share     2,399,674  

 

 

 

     
 

 

TABLE OF CONTENTS

 

  Page
   
PART I - FINANCIAL INFORMATION 3
   
Item 1. Unaudited Financial Statements 3
   
Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 3
   
Consolidated Statements of Operations for the Three- and Nine-Months Ended September 30, 2019 and 2018 4
   
Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2019 and 2018 5
   
Consolidated Statements of Equity for the Nine Months Ended September 30, 2019 and 2018 6
   
Notes to Unaudited Consolidated Financial Statements 7
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29
   
Item 3. Quantitative and Qualitative Disclosure About Market Risk 35
   
Item 4. Controls and Procedures 35
   
PART II - OTHER INFORMATION 36
   
Item 1. Legal Proceedings 36
   
Item 1A. Risk Factors 36
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 36
   
Item 3. Defaults Upon Senior Securities 36
   
Item 4. Mine Safety Disclosures 36
   
Item 5. Other Information 36
   
Item 6. Exhibits 37
   
SIGNATURES 38

 

  2  
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

    September 30, 2019     December 31, 2018  
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 135,364     $ 103,118  
Accounts receivable, net of $0 reserve at September 30, 2019 and December 31, 2018     411,442       474,830  
Inventories, net of $273,547 reserve at September 30, 2019 and December 31, 2018     713,886       765,478  
Prepaid expenses and other current assets     239,216       170,734  
Total current assets     1,499,908       1,514,160  
Investment in equity securities     16,643       16,643  
Property and equipment, net     94,242       69,272  
Other assets     201,534       136,385  
Intangible assets, net     598,558       663,462  
TOTAL ASSETS   $ 2,410,885     $ 2,399,922  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
CURRENT LIABILITIES                
Accounts payable   $ 612,839     $ 658,856  
Accrued employee compensation     393,498       456,932  
Accrued professional fees and other     1,573,872       1,112,995  
Other current liabilities     2,536,812       1,233,325  
Deferred revenue     27,495       20,623  
Operating lease liability     92,950       59,799  
Convertible debt, net of unamortized discounts of $326,380 and $156,180, respectively     4,888,935       4,000,805  
Other debt, net of unamortized discounts of $7,036 and $9,118, respectively     1,808,237       852,315  
Other related party debt     79,000       15,000  
Total current liabilities     12,013,638       8,410,650  
LONG TERM LIABILITIES                
Operating lease liability, net of current portion     -       76,586  
Deferred revenue     21,776       37,757  
TOTAL LIABILITIES     12,035,414       8,524,993  
COMMITMENTS AND CONTINGENCIES (Note 5)                
STOCKHOLDERS’ DEFICIT                
Series D Convertible Preferred Stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on September 30, 2019 and December 31, 2018, 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, 2019 and December 31, 2018, respectively     806       806  
Series H Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 10,000 shares issued and outstanding on September 30, 2019 and December 31, 2018, respectively     100       100  
Series H2 Convertible Preferred Stock, $.01 par value; 21 shares authorized; 21 shares issued and outstanding on September 30, 2019 and December 31, 2018, respectively     -       -  
Series J Convertible Preferred Stock, $.01 par value; 6,250 shares authorized; 3,458 shares issued and outstanding on September 30, 2019 and December 31, 2018, respectively     35       35  
Series K Convertible Preferred Stock, $.01 par value; 15,000 shares authorized; 6,880 shares issued and outstanding on September 30, 2019 and December 31, 2018, respectively     68       68  
Series AA Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 7,899 and 6,499 shares issued and outstanding on September 30, 2019 and December 31, 2018, respectively     80       65  
Common stock, $.01 par value; 100,000,000 shares authorized; 2,172,163 and 1,684,182 shares issued and outstanding on September 30, 2019 and December 31, 2018 respectively     21,722       16,842  
Warrants to acquire common stock     22,064,307       19,807,247  
Additional paid-in capital     43,263,325       39,777,301  
Accumulated deficit     (74,974,975 )     (65,727,538 )
Total stockholders’ deficit     (9,624,529 )     (6,125,071 )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT   $ 2,410,885     $ 2,399,922  

 

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,
 
    2019     2018     2019     2018  
Revenue:                                
Products, services, other   $ 501,158     $ 461,017     $ 1,530,061     $ 1,664,679  
Grant revenue     -       60,749       -       106,634  
Total revenue     501,158       521,766       1,530,061       1,771,313  
                                 
Costs and expenses:                                
Cost of products and services     285,794       234,320       899,678       829,155  
Research and development     276,712       262,054       832,954       910,862  
Selling and marketing     133,032       223,286       507,856       722,696  
General and administrative     874,611       735,505       3,155,800       2,270,953  
Total operating costs and expenses     1,570,149       1,455,165       5,396,288       4,733,666  
                                 
Operating loss     (1,068,991 )     (933,399 )     (3,866,227 )     (2,962,353 )
                                 
Other income (expense):                                
Interest expense     (2,124,477 )     (733,209 )     (4,001,711 )     (3,015,596 )
(Loss) Gain on extinguishment of debt     (185,203 )     (140,765 )     (332,474 )     335,132  
Incentive shares/warrants     -       -       -       (663,130 )
Other income (expense)     4,674     (1,283 )     4,400     (15,595 )
Total other expense     (2,305,006 )     (875,257 )     (4,329,785 )     (3,359,189 )
Income tax benefit     217,168     -       217,168     -  
Net loss     (3,156,829 )     (1,808,656 )     (7,978,844 )     (6,321,542 )
Deemed dividend on down round feature     -       -       -       (213,012 )
Deemed dividend on beneficial conversion feature     (675,979 )     (1,146,280 )     (2,625,710 )     (11,678,571 )
Preferred stock dividends     (492,494 )     (277,439 )     (1,268,593 )     (373,318 )
Net loss attributable to common stockholders   $ (4,325,302 )     (3,232,375 )   $ (11,873,147 )     (18,586,443 )
Basic and diluted net loss per share attributable to common stockholders   $ (2.20 )   $ (2.01 )   $ (6.29 )   $ (12.67 )
                                 
Weighted average common stock shares outstanding used in the basic and diluted net loss per share calculation     1,967,872       1,606,575       1,887,393       1,466,424  

 

The accompanying notes are an integral part of these unaudited consolidated

 

  4  
 

 

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

    For the Nine Months Ended  
    September 30,  
    2019     2018  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (7,978,844 )   $ (6,321,542 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Non-cash lease expense     43,435       -  
Common stock issued for debt extension     -       33,218  
Depreciation and amortization     68,849       70,681  
Accretion of interest and amortization of debt discount     886,950       1,405,490  
Issuance of incentive shares and common stock warrants     -       663,130  
Issuance of shares for services rendered     245,000       -  
Inventory reserve recovery     -       (39,900 )
Loss(Gain) on extinguishment of debt     332,474       (335,132 )
Stock-based compensation expense     722,576       299,584  
Shares issued with debt     -       7,800  
Impairment loss on investment     -       3,182  
Changes in operating assets and liabilities:                
Accounts receivable     63,388       (167,481 )
Inventories     51,593       (2,372 )
Prepaid expenses and other assets     (177,066 )     141,214  
Accounts payable     838,278     16,390  
Accrued employee compensation     (63,434 )     3,702  
Operating lease liability     (43,435 )     -  
Deferred revenue and other accrued expenses     (9,109 )     606,454  
Net cash used in operating activities     (5,019,345 )     (3,615,582 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchases of property plant and equipment     (28,915 )     -  
Net cash used in investing activities     (28,915 )     -  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Net proceeds from revolving note payable     -       460,000  
Net proceeds from Series AA Convertible Preferred Stock     3,185,100       1,255,463  
Net proceeds from convertible debt     4,601,300       3,848,484  
Net proceeds from non-convertible debt – third party     2,956,750       1,595,901  
Net proceeds from non-convertible debt – related party     239,000       116,100  
Payments on convertible debt     (3,705,485 )     (2,097,750 )
Payments on non-convertible debt     (2,021,159 )     (1,579,130 )
Payments on non-convertible debt – related party     (175,000 )     (58,600 )
Net cash provided by financing activities     5,080,506       3,540,468  
                 
NET INCREASE (DECREASE) IN CASH     32,246       (75,114 )
CASH AT BEGINNING OF YEAR     103,118       81,033  
CASH AT END OF PERIOD   $ 135,364     $ 5,919  
                 
SUPPLEMENTAL INFORMATION                
Interest paid in cash   $ 2,571,231     $ 856,562  
NON CASH TRANSACTIONS:                
Loan extension fees added to principal   $ 77,500          
Common stock issued for conversion of debt and accrued interest    

342,250

      -  
Common stock issued in lieu of cash for dividend    

190,123

      -  
Common stock issued in lieu of cash for interest     -       201,432  
Common stock issued for services to be rendered     -       173,520  
Common stock issued with debt     226,133       222,272  
Discount from warrants issued with convertible debt     -       162,023  
Discount from one-time interest     -       169,500  
Preferred stock dividends     1,268,593       373,318  
Conversion of debt into preferred stock     -       12,688,634  
Conversion of preferred stock into common stock     160       -  
Contingent beneficial conversion feature on convertible note     451,665       253,000  
Deemed dividend-triggered down round feature     -       213,012  
Deemed dividend-beneficial conversion feature     2,625,710       11,678,571  

 

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

 

  5  
 

 

PRESSURE BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

 

    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
other
comprehensive
    Accumulated     Total
Stockholders’
 
    Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Warrants     Capital     loss     Deficit     Deficit  
BALANCE, December 31, 2017     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880      $    68       -       -       1,342,858     $ 13,429     $ 9,878,513     $ 30,833,549     $         -     $ (55,349,299 )   $   (14,622,796 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       86,020       -       -       86,020  
Issuance of common stock for dividends paid-in-kind     -       -       -       -       -       -       -       -       -       -       -       -       -       -       22,606       226       -       80,529       -       -       80,755  
Common Stock issued for debt extension                                                                                                                     7,000       70       -       28,420                       28,490  
Stock issued with debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       15,750       158       -       59,106       -       -       59,264  
Warrants issued with debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       118,416       -       -       -       118,416  
Unrealized loss on investments, net of tax     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -  
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (2,231,654 )     (2,231,654 )
BALANCE, March 31, 2018     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68       -     $ -       1,388,214     $ 13,883     $ 9,996,929     $ 31,087,624     $ -     $ (57,580,953 )   $ (16,481,505 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       62,249       -       -       62,249  
Issuance of common stock for services     -       -       -       -       -       -       -       -       -       -       -       -       -       -                       -               -       -       -  
Down round feature triggered     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -               10,532,291     -       213,012   10,532,291
Incentive Shares/Warrants     -       -       -       -       -       -       -       -       -       -       -       -       -       -       110,833       1,108       312,637     $ 339,149       -       -       652,894  
Warrant exercise     -       -       -       -       -       -       -       -       -       -       -       -       -       -                       -               -       -       -  
Series AA Preferred Stock dividend     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (95,879 )     (95,879 )
Contingent beneficial feature on convertible notes                                                                                                                                           $

253,000

                    $

253,000

 
Issuance of warrants for services     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -  
Conversion of debt and interest for preferred stock     -       -       -       -       -       -       -       -       -       -       -       -       -       51       -       -       6,826,710       5,861,874       -       -       12,688,635  
Issuance of common stock for dividends paid-in-kind     -       -       -       -       -       -       -       -       -       -       -       -       -       -       2,637       26       -       9,242       -       -       9,268  
Deemed dividend-beneficial conversion feature     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (10,532,291 )      -      $ (213,012 )      (10,532,291 ) 
Conversion of Series K convertible preferred stock     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -  
Preferred Stock offering     -       -       -       -       -       -       -       -       -       -       -       -       120       1       -       -       172,932       127,067       -       -       300,000  
Offering costs for issuance of preferred stock     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       37,782       (111,691 )     -       -       (73,909 )
Stock issued with debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       35,410       354       -       118,927       -       -       119,281  
Warrants issued with debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       43,607       -       -       -       43,607  
Warrant modification     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       60,120       -               -       60,120  
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -               -       (2,281,232 )     (2,281,232 )
BALANCE, June 30, 2018     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68     $ 120     $ 52       1,537,094     $ 15,371     $ 17,450,717     $ 37,747,441     $ -     $ (59,958,064 )   $ (4,743,471 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       151,315       -       -       151,315  
Issuance of common stock for services     -       -       -       -       -       -       -       -       -       -       -       -       -       -       48,000       480       -       173,040       -       -       173,520  
Incentive Shares/Warrants     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -  
Warrant exercise     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -  
Series AA Preferred Stock dividend     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (277,439 )     (277,439 )
Issuance of common stock for dividends paid-in-kind     -       -       -       -       -       -       -       -       -       -       -       -       -       -       30,764       308       -       111,101       -       -       111,409  
Conversion of Series G convertible preferred stock     -       -                       -       -       -       -       -       -       -       -       -       -               -       -               -       -       -  
Deemed dividend-beneficial conversion feature     -       -       -       -       -       -       -       -                       -       -       -       -               -       -       -       -       -       -  
Preferred Stock offering     -       -       -       -       -       -       -       -       -       -       -       -       460       5               -       679,707       470,288       -       -       1,150,000  
Offering costs for issuance of preferred stock     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       160,265       (280,895 )     -       -       (120,630 )
Common Stock issued for debt extension     -       -       -       -       -       -       -       -       -       -       -       -       -       -       7,200       72       -       25,056       -       -       25,128  
Stock issued with debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       34,078       341       -       107,286       -       -       107,627  
Warrants issued with debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -               -       -       -       -  
Unrealized loss on investments, net of tax     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -  
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -               -       (1,752,154 )     (1,752,154 )
BALANCE, September 30, 2018     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68     $ 580     $ 57       1,657,136     $ 16,572     $ 18,290,689     $ 38,504,632     $ -     $ (61,987,657 )   $ (5,174,695 )

 

   

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 other comprehensive     Accumulated    

Total

Stockholders’

 
    Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Warrants     Capital     loss     Deficit     Deficit  
BALANCE, December 31, 2018     300     $       3       80,570     $ 806       10,000     $ 100       21     $        -       3,458     $    35       6,880      $ 68        6,499       65.00        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     -       -       -       -