| Summary of Significant Accounting Policies | 3)
Summary of Significant Accounting Policies Basis
of Presentation The
unaudited interim financial statements of Pressure BioSciences, Inc. and its consolidated subsidiaries (collectively, the “Company”)
included herein have been prepared by the Company in accordance with the instructions to Form 10-Q and the rules and regulations of the
U.S. Securities and Exchange Commission. Under these rules and regulations, some information and footnote disclosures normally included
in financial statements prepared under accounting principles generally accepted in the United States of America have been shortened or
omitted. Management believes that all adjustments necessary for a fair statement of the financial position and the results of operations
for the periods shown have been made. All adjustments are normal and recurring. These financial statements should be read together with
the Company’s audited financial statements included in its Form 10-K for the fiscal year ended December 31, 2023. Operating results
for the three months ended March 31, 2024 are not necessarily indicative of the final results that may be expected for the year ending
December 31, 2024. Use
of Estimates The
Company’s consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use of estimates, judgements and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods
presented. In addition, estimates were made in projecting future cash flows to quantify
impairment of assets, fair value of share based awards and investments in equity securities. We base our estimates on historical experience
and on various other assumptions that we believe to be reasonable under the circumstances. In the opinion of management, all adjustments
necessary in order to make the financial statements not misleading have been included. Actual results
could differ from the estimates, and such differences may be material to the Company’s consolidated financial statements. Intangibles assets as of March 31, 2024 are as follows: Schedule
of Intangible Assets
Website $ 1,516
Less website amortization (158 )
Customer list 664,237
Less Customer list amortization (69,191 )
Net Intangible Assets $ 596,404 Expected amortization expense
of intangible assets over the next 2 years is as follows: Schedule
of Expected Amortization Expense of Intangible Assets Twelve Months ended March 31,
2024 $ 332,875
2025 263,529
Net Intangible Assets $ 596,404 Impairment
of Long-Lived Assets The
Company accounts for long-lived assets in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 360, Accounting for the Impairment of Long-Lived Assets During
the quarter ended March 31, 2024, there were no triggering events related to the customer list for Uncle Bud’s which required an
analysis to be performed. Principles
of Consolidation The
consolidated financial statements include the accounts of Pressure BioSciences, Inc., and its wholly-owned subsidiaries PBI BioSeq, Inc.,
PBI Agrochem, Inc., and Uncle Buds Health and Wellness, Inc. All intercompany accounts and transactions have been eliminated in consolidation. Revenue
Recognition The
Company recognizes revenue under ASC Topic 606, Revenue from contract with Customers Revenue
is recognized under Topic 606
● executed contracts
with the Company’s customers that it believes are legally enforceable;
● identification of performance
obligations in the respective contract;
● determination of the transaction
price for each performance obligation in the respective contract;
● allocation the transaction
price to each performance obligation; and
● recognition of revenue
only when the Company satisfies each performance obligation. The
following is a summary of the revenue recognition policy for each of the Company’s subsidiaries PBI BioSeq, Inc. and PBI Agrochem,
Inc, we recognize revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, ASC 340-40, Other Assets
and Deferred Costs—Contracts with Customers We
identify a performance obligation as distinct if both the following criteria are true: the customer can benefit from the good or service
either on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer
the good or service to the customer is separately identifiable from other promises in the contract. Determining the standalone selling
price (“SSP”) and allocation of consideration from a contract to the individual performance obligations, and the appropriate
timing of revenue recognition is the result of significant qualitative and quantitative judgments. Management considers a variety of
factors such as historical sales, usage rates, costs, and expected margin, which may vary over time depending upon the unique facts and
circumstances related to each performance obligation in making these estimates. While changes in the allocation of the SSP between performance
obligations will not affect the amount of total revenue recognized for a particular contract, any material changes could impact the timing
of revenue recognition, which would have a material effect on our financial position and result of operations. This is because the contract
consideration is allocated to each performance obligation, delivered or undelivered, at the inception of the contract based on the SSP
of each distinct performance obligation. Taxes
assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are
collected by the Company from a customer, are excluded from revenue. Shipping
and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a
fulfillment cost and are in included in cost of revenues as consistent with treatment in prior periods. Our
current Barocycler® instruments require a basic level of instrumentation expertise to set-up for initial operation. To support a
favorable first experience for our customers, upon customer request, and for an additional fee, we will send a highly trained technical
representative to the customer site to install Barocyclers® that we sell, lease, or rent through our domestic sales force. The installation
process includes uncrating and setting up the instrument, followed by introductory user training. Our sales arrangements do not provide
our customers with a right of return. Any shipping costs billed to customers are recognized as revenue. The
majority of our instrument and consumable contracts contain pricing that is based on the market price for the product at the time of
delivery. Our obligations to deliver product volumes are typically satisfied and revenue is recognized when control of the product transfers
to our customers. Concurrent with the transfer of control, we typically receive the right to payment for the shipped product and the
customer has significant risks and rewards of ownership of the product. Payment terms require customers to pay shortly after delivery
and do not contain significant financing components. Revenue
from scientific services customers is recognized upon completion of each stage of service as defined in service agreements. We
apply ASC 845, “Accounting for Non-Monetary Transactions”, to account for products and services sold through non-cash transactions
based on the fair values of the products and services involved, where such values can be determined. Non-cash exchanges would require
revenue to be recognized at recorded cost or carrying value of the assets or services sold if any of the following conditions apply:
a) The
fair value of the asset or service involved is not determinable.
b) The
transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to
be sold in the same line of business to facilitate sales to customers other than the parties to the exchange.
c) The
transaction lacks commercial substance. We
recognize revenue for non-cash transactions at recorded cost or carrying value of the assets or services sold. We
account for lease agreements of our instruments in accordance with ASC 842, Leases. We record revenue over the life of the lease term,
and we record depreciation expense on a straight-line basis over the thirty-six-month estimated useful life of the Barocycler® instrument.
The depreciation expense associated with assets under lease agreement is included in the “Cost of PCT products and services”
line item in our accompanying consolidated statements of operations. Many of our lease and rental agreements allow the lessee to purchase
the instrument at any point during the term of the agreement with partial or full credit for payments previously made. We pay all maintenance
costs associated with the instrument during the term of the leases. Deferred
revenue represents amounts received from service contracts for which the related revenues have not been recognized because one or more
of the revenue recognition criteria have not been met. Revenue from service contracts is recorded ratably over the length of the contract. Uncle Buds Health and Wellness,
Inc. (“Uncle Bud’s”, “UB”) As
part of the acquisition of Uncle Bud’s, the Company analyzed ASC Topic 606, Revenue from Contracts with Customers and
determined to recognized revenue when control of the product is transferred to the customer and they have assumed the risk of loss,
which is typically when it is received by the customer. UB generated $ 153,787 15,000 Additionally,
Uncle Bud’s has no future contracts or obligations to the customer to provide future services or expenses whereby future revenue is generated. Disaggregation
of revenue In
the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition. Schedule
of Disaggregation of Revenue
In thousands of US dollars ($) Three Months Ended March 31,
Primary geographical markets 2024 2023
North America $ 340 $ 556
Europe 6 36
Asia 3 149
$ 349 $ 741
Three Months Ended March 31,
Major products/services lines 2024 2023
Hardware $ 83 $ 428
Consumables 38 66
Contract research services - 5
Sample preparation accessories 48 45
Consumer Products 154 -
Agrochem products - 131
Technical support/extended service contracts 20 43
Shipping and handling 6 19
Other - 4
$ 349 $ 741
Three Months Ended March 31,
Timing of revenue recognition 2024 2023
Products transferred at a point in time $ 328 $ 693
Services transferred over time 21 48
$ 349 $ 741 Contract
balances Schedule
of Contract Balances
In
thousands of US dollars ($) March 31, 2024 December 31, 2023
Receivables, which are included
in ‘Accounts Receivable’ $ 145 $ 151
Contract liabilities (deferred revenue) 242 34 Transaction
price allocated to the remaining performance obligations The
following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied
(or partially unsatisfied) at the end of the reporting period. Schedule
of Future Related to Performance Obligations
In thousands of US dollars ($) 2024 2025 Total
Extended warranty service $ 234 $ 8 $ 242 All
consideration from contracts with customers is included in the amounts presented above. Contract
Costs The
Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets
that the Company otherwise would have recognized is one year or less. These costs are included in selling, general, and administrative
expenses. The costs to obtain a contract are recorded immediately in the period when the revenue is recognized either upon shipment or
installation. The costs to obtain a service contract are considered immaterial when spread over the life of the contract so the Company
records the costs immediately upon billing. Segment
Reporting We
organize our business segments based on the nature of the products and services offered. Operating segments are defined as the
components of a business which separate financial information is available. In Note 8, the table of financial data, the total of the
operating results of these business segments is reconciled, as appropriate, to the corresponding consolidated amount. There are some
corporate expenses that were not allocated to the business segments, and these expenses are contained in the “Operating
expenses” under Parent. Our
Industrial segment contains the UST, BaroFold and PCT Platforms. Due to our purchase of Uncle Bud’s , the Company analyzed ASC 280-10-50 and determined that Uncle Bud’s
qualifies as an operating segment. Our Consumer segment represents the activity of Uncle Bud’s. Uncle Bud’s offers products
direct-to-consumer online and through major retail chains. Based
on the above, management has determined to report under the following segments:
- Corporate
– for shared expenses between the other reportable segments
- Pressure
Biosciences reported as “Industrial”
- Uncle
Buds reported as “Consumer” Goodwill Goodwill
is recorded as the excess, if any, of the aggregate fair value of consideration exchanged for an acquired business over the fair value
(measured at the acquisition date) of total net tangible and identified intangible assets acquired. Goodwill and other intangible assets
with indefinite lives are not amortized but are tested for impairment on an annual basis or whenever events or changes in circumstances
indicate that the carrying amount of these assets may not be recoverable. We first assess qualitative factors to determine whether it
is necessary to perform the quantitative goodwill impairment test. If the qualitative assessment determines it is necessary, we will
perform a quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment
loss to be recognized (if any). We
are required to identify our reporting units and determine the carrying value of each reporting unit. We analyze financial information
of our operations to identify discrete segments that constitute a reporting unit. We assign assets acquired and liabilities assumed in
business combinations to those reporting units. We are required to determine the fair value of each reporting unit and compare it to
the carrying amount of the reporting unit. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting
unit, we would be required to book an impairment loss. All
assessments of goodwill impairment are conducted at the individual reporting unit level. As of March 31, 2024, the only reporting unit
with goodwill is Uncle Bud’s. We
determined no impairment of our goodwill occurred for the period ended March 31, 2024. Concentrations Credit
Risk Our
financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash, cash equivalents, and trade
receivables. We have cash investment policies which, among other things, limit investments to investment-grade securities. We perform
ongoing credit evaluations of our customers, and the risk with respect to trade receivables is further mitigated by the fact that many
of our customers are government institutions, large pharmaceutical and biotechnology companies, and academic laboratories. The
following table illustrates the level of concentration as a percentage of total revenues during the three months ended March 31, 2024
and 2023. Schedule
of Customer Concentration Risk Percentage
For the Three Months Ended
March 31,
2024 2023
Top Five Customers 48 % 64 % The
following table illustrates the level of concentration as a percentage of net accounts receivable balance as of March 31, 2024 and December
31, 2023. The Top Five Customers category may include federal agency receivable balances if applicable.
March 31, 2024 December 31, 2023
Top Five Customers 100 % 96 % Investment
in Equity Securities As
of March 31, 2024, we held 100,250 We
account for this investment in accordance with ASC 320 “Investments — Debt and Equity Securities”. ASC 320 requires
equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. As
of March 31, 2024, our consolidated balance sheet reflected the fair value, determined on a recurring basis based on Level 1 inputs of
our investment in Nexity, to be $ 66,031 4,155 Computation
of Loss per Share Basic
loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding.
Diluted loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares
outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For purposes
of this calculation, convertible preferred stock, common stock dividends, and warrants and options to acquire common stock, are all considered
common stock equivalents in periods in which they have a dilutive effect and are excluded from this calculation in periods in which these
are anti-dilutive to our net loss. The
following table illustrates our computation of loss per share for the three months ended March 31, 2024 and 2023: Schedule
of Computation of Loss Per Share
For the Three Months Ended March 31,
2024 2023
Numerator:
Net loss attributable to common stockholders $ (8,706,476 ) $ (7,289,641 )
Denominator for basic and diluted loss per share:
Weighted average common stock shares outstanding 39,811,524 15,839,373
Loss per common share – basic and diluted $ (0.22 ) $ (0.46 ) 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 AA Convertible Preferred Stock, Series BB Convertible
Preferred Stock, Series CC Convertible Preferred Stock and Series DD Convertible Preferred Stock are presented below as if they were
converted into common shares according to the conversion terms. Schedule
of Anti-Dilutive Securities Excluded from Computation of Earnings Per Share
As of March 31,
2024 2023
Stock options 5,724,504 3,420,754
Convertible debt 9,568,173 7,620,701
Common stock warrants 15,577,354 16,217,101
Convertible preferred stock:
Series D Convertible Preferred 6,250 6,250
Series AA Convertible Preferred 8,645,000 8,645,000
Series BB Convertible Preferred 16,230,000 -
Series CC Convertible Preferred 4,010,000 -
Series DD Convertible Preferred 2,540,000 -
Total
potentially dilutive shares 62,301,281 35,909,806 Accounting
for Stock-Based Compensation Expense We
maintain equity compensation plans under which incentive stock options and non-qualified stock options are granted to employees, independent
members of our Board of Directors and outside consultants. We recognize stock-based compensation expense over the requisite service period
using the Black-Scholes formula to estimate the fair value of the stock options on the date of grant. Determining
Fair Value of Stock Option Grants The
following table summarizes the assumptions we utilized for grants of stock options to the three sub-groups of our stock option recipients
during the three months ended March 31, 2024: Summary
of Assumptions for the Grants of Stock Options
Assumptions CEO, other Officers and Employees
Expected life 6.0 )
Expected volatility 155.0 %
Risk-free interest rate 4.20 %
Forfeiture rate 0 5.00 %
Expected dividend yield 0.0 % Valuation
and Amortization Method - The fair value of each option award is estimated on the date of grant using the Black-Scholes pricing model
based on certain assumptions. The estimated fair value of employee stock options is amortized to expense using the straight-line method
over the vesting period. Expected
Term - The Company uses the simplified calculation of expected life, as the Company does not currently have sufficient historical exercise
data on which to base an estimate of expected term. Using this method, the expected term is determined using the average of the vesting
period and the contractual life of the stock options granted. Expected
Volatility - Expected volatility is based on the Company’s historical stock volatility data over the expected term of the award. Risk-Free
Interest Rate - The Company bases the risk-free interest rate used in the Black-Scholes valuation method on the implied yield currently
available on U.S. Treasury zero-coupon issues with an equivalent remaining term. Forfeitures
- The Company records stock-based compensation expense only for those awards that are expected to vest. The Company estimated a forfeiture
rate of 5 All
of the outstanding non-qualified options had an exercise price that was at or above the Company’s common stock share price at time
of issuance. The
Company recognized stock-based compensation expense of $ 240,292 1,430,244 Schedule
of Stock Based Compensation Expense
For the Three Months Ended
March 31,
2024 2023
Cost of sales $ 14,664 $ 53,481
Research and development 43,257 170,620
Consumer Products 54,335 -
Selling and marketing 25,286 72,099
General and administrative 102,750 1,134,044
Total stock-based compensation expense $ 240,292 $ 1,430,244 Fair
Value of Financial Instruments Due
to their short maturities, the carrying amounts for cash and cash equivalents, accounts receivable, accounts payable, accrued expenses
and debt approximate their fair value. The carrying amount of long-term debt approximates fair value due to interest rates that approximate
prevailing market rates. Fair
Value Measurements The
Company follows the guidance of FASB ASC Topic 820, “ Fair Value Measurements and Disclosures The
Company generally defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price). The Company uses a three-tier fair value hierarchy, which
classifies the inputs used in measuring fair values. These tiers include Level 1, defined as observable inputs such as quoted prices
for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring the
Company to develop its own assumptions. A slight change in an unobservable input like volatility could have a significant impact on fair
value measurement. Financial
assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The Company has determined that its financial assets are classified within Level 1 in the fair value hierarchy. The development of the
unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management. 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, 2024: Schedule
of Assets and Liabilities Measured at Fair Value on Recurring Basis
Fair value measurements at March 31, 2024 using:
March 31, 2024 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
Equity Securities $ 66,031 $ 66,031 - -
Total Financial Assets $ 66,031 $ 66,031 $ - $ - 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, 2023:
Fair value measurements at December 31, 2023 using:
December 31, 2023 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
Equity Securities 61,876 61,876 - -
Total Financial Assets $ 61,876 $ 61,876 $ - $ - |
