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, 2020

 

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
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.

 

[X] Yes [  ] No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post 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” and “smaller reporting 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

 

The number of shares outstanding of the Issuer’s common stock as of November 12, 2020 was 3,884,825.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
   
PART I - FINANCIAL INFORMATION 3
   
Item 1. Unaudited Financial Statements 3
   
Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 3
   
Consolidated Statements of Operations for the Three- and Nine-Months Ended September 30, 2020 and 2019 4
   
Consolidated Statements of Cash Flows for the Nine-Months Ended September 30, 2020 and 2019 5
   
Consolidated Statements of Changes in Stockholders’ Deficit for the Nine Months Ended September 30, 2020 and 2019 6
   
Notes to Unaudited Consolidated Financial Statements 8
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28
   
Item 3. Quantitative and Qualitative Disclosure About Market Risk 33
   
Item 4. Controls and Procedures 33
   
PART II - OTHER INFORMATION 34
   
Item 1. Legal Proceedings 34
   
Item 1A. Risk Factors 34
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
   
Item 3. Defaults Upon Senior Securities 35
   
Item 4. Mine Safety Disclosures 35
   
Item 5. Other Information 35
   
Item 6. Exhibits 36
   
SIGNATURES 37

 

2

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

    September 30, 2020     December 31, 2019  
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 94,752     $ 29,625  
Accounts receivable     330,459       229,402  
Inventories, net of $342,496 reserve at September 30, 2020 and December 31, 2019     516,205       617,716  
Loan receivable     801,250       -  
Prepaid expenses and other current assets     159,739       213,549  
Total current assets     1,902,405       1,090,292  
Investment in equity securities     503,366       16,643  
Property and equipment, net     18,733       55,590  
Right of use asset leases     20,958       76,586  
Intangible assets, net     512,019       576,923  
TOTAL ASSETS   $ 2,957,481     $ 1,816,034  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
CURRENT LIABILITIES                
Accounts payable   $ 706,319     $ 815,764  
Accrued employee compensation     450,591       451,200  
Accrued professional fees and other     2,035,252       1,658,452  
Accrued interest     5,593,508       2,949,621  
Deferred revenue     47,623       23,248  
Operating lease liability     20,958       76,586  
Convertible debt, net of unamortized discounts of $4,738,724 and $619,227, respectively     7,095,113       6,121,338  
Other debt, net of unamortized discounts of $0 and $1,769, respectively     886,501       1,675,667  
Other related party debt     105,000       81,500  
Total current liabilities     16,940,865       13,853,376  
LONG TERM LIABILITIES                
Long term debt     527,039       -  
Deferred revenue     25,957       18,065  
TOTAL LIABILITIES     17,493,861       13,871,441  
COMMITMENTS AND CONTINGENCIES (Note 4)                
STOCKHOLDERS’ DEFICIT                
Series D Convertible Preferred Stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on September 30, 2020 and December 31, 2019, 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, 2020 and December 31, 2019, respectively     806       806  
Series H Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 10,000 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively     100       100  
Series H2 Convertible Preferred Stock, $.01 par value; 21 shares authorized; 21 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively     -       -  
Series J Convertible Preferred Stock, $.01 par value; 6,250 shares authorized; 3,458 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively     35       35  
Series K Convertible Preferred Stock, $.01 par value; 15,000 shares authorized; 6,880 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively     68       68  
Series AA Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 7,983 and 7,939 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively     80       80  
Common stock, $.01 par value; 100,000,000 shares authorized; 3,839,256 and 2,549,620 shares issued and outstanding on September 30, 2020 and December 31, 2019 respectively     38,392       25,496  
Warrants to acquire common stock     28,207,172       22,599,177  
Additional paid-in capital     49,079,182       44,261,105  
Accumulated deficit     (91,862,218 )     (78,942,277 )
Total stockholders’ deficit     (14,536,380 )     (12,055,407 )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT   $ 2,957,481     $ 1,816,034  

 

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,
 
    2020     2019     2020     2019  
Revenue:                                
Products, services, other   $ 533,862     $ 501,158     $ 1,055,889     $ 1,530,061  
Total revenue     533,862       501,158       1,055,889       1,530,061  
                                 
Costs and expenses:                                
Cost of products and services     247,013       285,794       557,041       899,678  
Research and development     247,432       276,712       807,724       832,954  
Selling and marketing     173,372       133,032       524,586       507,856  
General and administrative     684,807       874,611       2,711,032       3,155,800  
Total operating costs and expenses     1,352,624       1,570,149       4,600,383       5,396,288  
                                 
Operating loss     (818,762 )     (1,068,991 )     (3,544,494 )     (3,866,227 )
                                 
Other (expense) income:                                
Interest expense, net     (2,204,593 )     (2,124,477 )     (5,501,272 )     (4,001,711 )
Unrealized gain on investment in equity securities     140,461       -       486,723       -  
Loss on extinguishment of liabilities     (395,854 )     (185,203 )     (3,242,372 )     (332,474 )
Other income     -       4,674       -       4,400  
Total other expense     (2,459,986 )     (2,305,006 )     (8,256,921 )     (4,329,785 )
Income tax benefit             217,168               217,168  
Net loss     (3,278,748 )     (3,156,829 )     (11,801,415 )     (7,978,844 )
Deemed dividend on beneficial conversion feature     -       (675,979 )     -       (2,625,710 )
Preferred stock dividends     (396,970 )     (492,494 )     (1,118,526 )     (1,268,593 )
Net loss attributable to common stockholders   $ (3,675,718 )   $ (4,325,302 )   $ (12,919,941 )   $ (11,873,147 )
Basic and diluted net loss per share attributable to common stockholders   $ (1.02 )   $ (2.20 )   $ (4.22 )   $ (6.29 )
                                 
Weighted average common stock shares outstanding used in the basic and diluted net loss per share calculation     3,612,958       1,967,872       3,059,095       1,887,393  

 

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

 

4

 

 

PRESSURE BIOSCIENCES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

    For the Nine Months Ended  
    September 30,  
    2020     2019  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (11,801,415 )   $ (7,978,844 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Non-cash lease expense     55,628       43,435  
Common stock issued for interest and extension fees     242,350       -  
Depreciation and amortization     103,424       68,849  
Accretion of interest and amortization of debt discount     3,454,470       886,950  
Issuance of shares for services rendered     -       245,000  
Loss on extinguishment of accrued liabilities and debt     1,036,638       332,474  
Stock-based compensation expense     373,652       722,576  
Gain on investment in equity securities     (486,723 )     -  
Common stock issued for services     87,963       -  
Changes in operating assets and liabilities:                
Accounts receivable     (101,057 )     63,388  
Inventories     101,511       51,593  
Prepaid expenses and other assets     53,810       (177,066 )
Accounts payable     (109,445 )     838,278  
Accrued employee compensation     (609 )     (63,434 )
Operating lease liability     (55,628 )     (43,435 )
Deferred revenue and other accrued expenses     3,138,667       (9,109 )
Net cash used in operating activities     (3,906,764 )     (5,019,345 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Advance on loan receivable     (801,250 )     -  
Purchases of property plant and equipment     (1,663 )     (28,915 )
Net cash used in investing activities     (802,913 )     (28,915 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Net proceeds from Series AA Convertible Preferred Stock     -       3,185,100  
Net proceeds from convertible debt     6,977,800       4,601,300  
Net proceeds from non-convertible debt – third party     990,539       2,956,750  
Net proceeds from non-convertible debt – related party     38,500       239,000  
Payments on convertible debt     (1,972,007 )     (3,705,485 )
Payments on non-convertible debt – related party     (15,000)       (175,000 )
Payments on non-convertible debt     (1,245,028 )     (2,021,159 )
Net cash provided by financing activities     4,774,804       5,080,506  
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS     65,127       32,246  
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR     29,625       103,118  
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 94,752     $ 135,364  
                 
SUPPLEMENTAL INFORMATION                
Interest paid in cash   $ 530,009     $ 2,571,231  
NON CASH TRANSACTIONS:                
Loan extension fees and interest added to principal   $ 152,552     $ 77,500  
Conversion of debt for Series AA preferred stock     110,000       -  
Common stock issued for debt settlement     374,550       -  
Common stock issued to settle accrued liabilities     127,855       -  
Common stock issued with debt     147,775       226,133  
Discount from warrants issued with debt     4,261,055       -  
Common stock issued in lieu of cash for dividend     221,374       190,123  
Preferred stock dividends     1,118,526       1,268,593  
Conversion of debt and interest into common stock     1,830,543       342,250  
Conversion of preferred stock into common stock     -       160  
Discount due to beneficial conversion feature     1,353,694       451,665  
Deemed dividend-beneficial conversion feature     -       2,625,710  

 

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

 

5

 

 

PRESSURE BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)

 

    Series D     Series G     Series H     Series H(2)     Series J     Series K     Series AA                                    
    Preferred
Stock
    Preferred
Stock
    Preferred
Stock
    Preferred
Stock
    Preferred
Stock
    Preferred
Stock
    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, 2018     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68       6,499       65       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     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (355,610 )     (355,610 )
Issuance of shares for services     -       -       -       -       -       -       -       -       -       -       -       -       -       -       50,000       500             167,500       -       168,000  
Beneficial conversion feature on Series AA convertible preferred stock     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       1,060,199       -       1,060,199  
Deemed dividend-beneficial conversion feature     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (1,060,199 )     -       (1,060,199 )
Preferred Stock offering     -       -       -       -       -       -       -       -       -       -       -       -       560       6       -       -       738,528       661,466       -       1,400,000  
Offering costs for issuance of preferred stock     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       160,764       (300,764 )     -       (140,000 )
Common Stock issued for debt extension     -       -       -       -       -       -       -           -       -       -       -       -       -       -       16,350       163       -       38,825               38,988  
Stock issued with debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       17,958       180       -       50,553       -       50,733  
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (2,055,173 )     (2,055,173 )
BALANCE, March 31, 2019     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68       7,059     $ 71       1,768,492     $ 17,685     $ 20,706,539     $ 40,640,273     $ (68,138,321 )   $ (6,772,741 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       362,182       -       362,182  
Series AA Preferred Stock dividend     -       -       -       -       -       -       -       -       -       -       -       -               -                                       (420,489 )     (420,489 )
Beneficial conversion feature on Series AA convertible preferred stock     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       889,532       -       889,532  
Deemed dividend-beneficial conversion feature     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (889,532 )     -       (889,532 )
Issuance of common stock for dividends paid-in-kind     -       -       -       -       -       -       -       -       -       -       -       -                       42,456       425               151,568       -       151,993  
Preferred Stock offering     -       -       -       -       -       -       -       -       -       -       -       -       459       5                       608,852       538,062       -       1,146,919  
Offering costs for issuance of preferred stock     -       -       -       -       -       -       -       -       -       -       -       -               -                       131,251       (245,870 )     -       (114,619 )
Stock issued with debt     -       -       -       -       -       -       -       -       -       -       -       -               -       29,641       296               105,293       -       105,589  
Common Stock issued for debt extension     -       -       -       -       -       -       -       -       -       -       -       -       -       -       49,027       490               125,418       -       125,908  
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -               (2,766,842 )     (2,766,842 )
BALANCE, June 30, 2019     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68       7,518     $ 76       1,889,616     $ 18,896     $ 21,446,642     $ 41,676,926     $ (71,325,652 )   $ (8,182,100 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       115,002       -       115,002  
Issuance of common stock for services     -       -       -       -       -       -       -       -       -       -       -       -       -       -       25,000       250               76,750       -       77,000  
Series AA Preferred Stock dividend     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -               (492,494 )     (492,494 )
Conversion of debt and interest for common stock     -       -       -       -       -       -       -       -       -       -       -       -       -       -       120,000       1,200       -       341,050       -       342,250  
Issuance of common stock for dividends paid-in-kind     -       -       -       -       -       -       -       -       -       -       -       -                       19,454       195               37,935       -       38,130  
Conversion of Series AA convertible preferred stock     -       -                       -       -       -       -       -       -       -       -       (16 )     (0 )     16,000       160               (160 )     -       (0 )
Deemed dividend-beneficial conversion feature     -       -       -       -       -       -       -       -                       -       -                                               (675,979 )           (675,979 )
Beneficial feature on Preferred Stock Offering     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       675,979       -       675,979  
Preferred Stock offering     -       -       -       -       -       -       -       -       -       -       -       -       397       4                   511,739       480,257             992,000  
Offering costs for issuance of preferred stock     -       -       -       -       -       -       -       -       -       -       -       -                                   105,926       (205,126 )           (99,200 )
Stock issued with debt     -       -       -       -       -       -       -       -       -       -       -       -                   22,483       225       -       58,509             58,734  
Common Stock/Warrants issued for debt extension     -       -       -       -       -       -       -       -       -       -       -       -                   79,610       796       -     $ 230,517             231,313  
Beneficial conversion feature on convertible debt     -       -                                                                                               $ 451,665             451,665  
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -               (3,156,829 )     (3,156,829 )
BALANCE, September 30, 2019     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68       7,899     $ 80       2,172,163     $ 21,722     $ 22,064,307     $ 43,263,325     $ (74,974,975 )   $ (9,624,529 )

 

6

 

 

   

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, 2019     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68       7939     $ 80       2,549,620     $ 25,496     $ 22,599,177     $ 44,261,105     $ (78,942,277 )   $ (12,055,407 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       241,769       -       241,769  
Series AA Preferred Stock dividend     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -               (324,586 )     (324,586 )
Issuance of common stock to settle accrued liabilities     -       -       -       -       -       -       -       -       -       -       -       -       -       -       66,500       665             127,190       -       127,855  
Common stock issued for debt settlement     -       -       -       -       -       -       -       -       -       -       -       -       -       -       10,000       100       -       24,900       -       25,000  
Beneficial conversion feature on debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       404,608       -       404,608  
Warrants issued for debt extension     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       609,143             -       609,143  
Issuance of common stock for debt extension and interest paid in kind     -       -                                           -                                     38,521       385       -       60,175             60,560  
Warrants issued with debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       1,205,010       -       -       1,205,010  
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (3,953,885 )     (3,953,885 )
BALANCE, March 31, 2020     300     $ 3       80,570     $ 806       10,000     $ 100       21     $ -       3,458     $ 35       6,880     $ 68       7,939     $ 80       2,664,641     $ 26,646     $ 24,413,330     $ 45,119,747     $ (83,220,748 )   $ (13,659,933 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       65,341       -       65,341  
Series AA Preferred Stock dividend     -       -       -       -       -       -       -       -       -       -       -       -       -       -                         -       (396,970 )     (396,970 )
Beneficial conversion feature on debt     -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       577,489       -       577,489  
Issuance of common stock for services     -       -       -       -       -       -       -       -       -       -       -       -       -       -       25,000       250             87,713       -       87,963  
Issuance of common stock for interest paid-in-kind     -       -       -       -       -       -       -       -       -       -