UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
or
For the transition period from _____________ to _____________
Commission
File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(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.
☒
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).
☒
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 | ☐ | |
| ☒ | Smaller Reporting Company | |||
| 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 ☒
The number of shares outstanding of the Issuer’s common stock as of May 10, 2023 was .
TABLE OF CONTENTS
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| March 31, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories, net of $ | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Investment in equity securities | ||||||||
| Property and equipment, net | ||||||||
| Right of use asset operating leases | ||||||||
| Intangible assets, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued employee compensation | ||||||||
| Accrued professional fees and other | ||||||||
| Accrued interest and dividends payable | ||||||||
| Deferred revenue | ||||||||
| Convertible debt, net of unamortized debt discounts of $ | ||||||||
| Other debt, net of unamortized discounts of $ | ||||||||
| Related party, net of unamortized debt discount of $ | ||||||||
| Right of use operating lease liability | ||||||||
| Total current liabilities | ||||||||
| LONG TERM LIABILITIES | ||||||||
| Long term debt | ||||||||
| Right of use operating lease liability long term | ||||||||
| Deferred revenue | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (Note 4) | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Series D, G, H, H2, J, K, AA Convertible Preferred Stock, $ par value (Note 6) | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding on March 31, 2023 and December 31, 2022, respectively | ||||||||
| Warrants to acquire common stock | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 3 |
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue: | ||||||||
| Products, services, other | $ | $ | ||||||
| Total revenue | ||||||||
| Costs and expenses: | ||||||||
| Cost of products and services | ||||||||
| Research and development | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Total operating costs | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other (expense) income: | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Unrealized gain on investment in equity securities | ||||||||
| Gain (loss) on extinguishment of liabilities | ( | ) | ||||||
| Other income (expense) | ( | ) | ||||||
| Total other expense | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Preferred stock dividends | ( | ) | ( | ) | ||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss per share attributable to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding used in the basic and diluted net loss per share calculation | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 4 |
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Gain on extinguishment of debt and interest | ( | ) | ( | ) | ||||
| Non-cash lease expense | ||||||||
| Common stock and warrants issued for interest | ||||||||
| Depreciation and amortization | ||||||||
| Accretion of interest and amortization of debt discount | ||||||||
| Loss on extinguishment of accrued liabilities and debt | ||||||||
| Common stock issued for debt extension | ||||||||
| Stock-based compensation expense | ||||||||
| Gain on investment in equity securities | ( | ) | ( | ) | ||||
| Common stock and warrants issued for services | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued employee compensation | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Deferred revenue and other accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property plant and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Sale of common stock | ||||||||
| Proceeds from stock option exercises | ||||||||
| Net proceeds from convertible debt | ||||||||
| Net proceeds from non-convertible debt - third party | ||||||||
| Net proceeds from debt - related party | ||||||||
| Payments on convertible debt | ( | ) | ( | ) | ||||
| Payments on debt - related party | ( | ) | ||||||
| Payments on non-convertible debt | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ | ||||||
| CASH FLOWS SUPPLEMENTAL INFORMATION | ||||||||
| Interest paid in cash | $ | $ | ||||||
| NON CASH TRANSACTIONS: | ||||||||
| Early adoption of ASU 2020-06 adoption | ||||||||
| Common stock issued with debt | ||||||||
| Discount from warrants issued with debt | ||||||||
| Common stock issued in lieu of cash for dividend | ||||||||
| Preferred stock dividends | ||||||||
| Conversion of preferred stock for common stock | ||||||||
| Conversion of debt and interest into common stock | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 5 |
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
| Combined Preferred Stock | Common Stock | Stock | Additional Paid In | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Warrants | Capital | Deficit | Deficit | |||||||||||||||||||||||||
| BALANCE, December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Early adoption of ASU 2020-06 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Series AA Preferred Stock dividend | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of common stock for services | - | |||||||||||||||||||||||||||||||
| Issuance of common stock warrants for services | - | - | ||||||||||||||||||||||||||||||
| Warrants issued for debt extension | - | - | ||||||||||||||||||||||||||||||
| Common stock issued for debt extension | - | |||||||||||||||||||||||||||||||
| Conversion of debt and interest for common stock | - | |||||||||||||||||||||||||||||||
| Issuance of common stock for dividends paid-in-kind | - | |||||||||||||||||||||||||||||||
| Issuance of common stock for interest paid-in-kind | - | |||||||||||||||||||||||||||||||
| Stock issued with debt | - | |||||||||||||||||||||||||||||||
| Warrants issued with debt | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| BALANCE, March 31, 2022 | $ | | $ | | $ | | $ | | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Combined Preferred Stock | Common Stock | Stock | Additional Paid In | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Warrants | Capital | Deficit | Deficit | |||||||||||||||||||||||||
| BALANCE, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Stock option exercise | - | |||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Series AA Preferred Stock dividend | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of common stock for services | - | |||||||||||||||||||||||||||||||
| Issuance of common stock warrants for services | - | - | ||||||||||||||||||||||||||||||
| Conversion of debt and interest for common stock | - | |||||||||||||||||||||||||||||||
| Issuance of common stock for dividends paid-in-kind | - | |||||||||||||||||||||||||||||||
| Issuance of common stock for interest paid-in-kind | - | |||||||||||||||||||||||||||||||
| Common stock issued for debt extension | - | |||||||||||||||||||||||||||||||
| Stock issued with debt | - | |||||||||||||||||||||||||||||||
| Conversion of preferred stock for common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Sale of common stock for cash | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | | $ | | $ | | $ | | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 6 |
PRESSURE BIOSCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
(UNAUDITED)
1) Business Overview, Liquidity and Management Plans
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) Pressure Cycling Technology (“PCT”), (ii) BaroFold Technology (“BaroFold”), and (iii) Ultra Shear Technology (“UST”).
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. Although this premise has been proven true, and although PBI has been successful in installing its PCT Platform in the laboratories of key opinion leaders worldwide, the Company now believes – based on market feedback – that the commercial potential for its UST Platform far exceeds the potential of the PCT Platform. Consequently, in January 2022, PBI made the critical decision to immediately shift its primary business focus from PCT to its innovative UST Platform.
The UST Platform (7 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), therapeutics (e.g., prednisone), and other active ingredients (e.g., retinol, astaxanthin) into long-term stable, effectively water-soluble, highly bioavailable, oil-in-water nanoemulsion formulations. The Company began commercialization of the UST Platform in May 2022, and executed agreements have subsequently been announced with three CBD companies and one cosmeceutical/skincare company for commercialization in Q4 2022.
The BaroFold Platform (8 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 (15 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 primary focus is on making our recently released, 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.
2) Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, we have experienced losses from operations and negative cash flows from operations with respect to our pressure cycling technology business since our inception. As of March 31, 2023, we do not have adequate working capital resources to satisfy our current liabilities and as a result, there is substantial doubt regarding our ability to continue as a going concern. We have been successful in raising debt and equity capital in the past and as described in Notes 5 and 6. In addition we raised debt and equity capital after March 31, 2023 as described in Note 7. We have financing efforts in place to continue to raise cash through debt and equity offerings. Although we have successfully completed financings and reduced expenses in the past, we cannot assure you that our plans to address these matters in the future will be successful. These financial statements do not include any adjustments that might result from this uncertainty.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 7 |
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, 2022. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2023.
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. Global concerns about the COVID-19 pandemic have adversely affected, and we expect will continue to adversely affect, our business, financial condition and results of operations including the estimates and assumptions made by management. Significant estimates and assumptions include valuations of share-based awards, investments in equity securities and intangible asset impairment. Actual results could differ from the estimates, and such differences may be material to the Company’s consolidated financial statements.
Recent Accounting Pronouncements
In
August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible
Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity
of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements.
Among other changes, the new guidance removes the beneficial conversion separation model for convertible debt. As a result, after adopting
the guidance, entities will no longer account for beneficial conversion features in equity. The guidance is effective for public business
entities, other than small reporting company’s financial statements starting January 1, 2022, with early adoption permitted. The
Company is a small reporting company and early adopted the new guidance on January 1, 2022 using the modified retrospective approach
and recorded a cumulative effect of adoption equal to a $
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which requires measurement and recognition of expected credit losses for financial assets held. We adopted this new accounting guidance effective January 1, 2023. The adoption did not have a material impact on our consolidated financial statements and disclosures and did not significantly impact the Company’s accounting policies or estimation methods related to the allowance for doubtful accounts. The Company does not have any reserve for doubtful accounts due to its customers being distributors, universities, research organizations and government agencies. In the past several years, all its customers have paid in full without any need for a write-down.
Principles of Consolidation
The consolidated financial statements include the accounts of Pressure BioSciences, Inc., and its wholly owned subsidiaries PBI BioSeq, Inc. and PBI Agrochem, Inc. All intercompany accounts and transactions have been eliminated in consolidation.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 8 |
Revenue Recognition
We recognize revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, and ASC 340-40, Other Assets and Deferred Costs—Contracts with Customers. Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We enter into sales contracts that may consist of multiple distinct performance obligations where certain performance obligations of the sales contract are not delivered in one reporting period. We measure and allocate revenue according to ASC 606-10.
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.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 9 |
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.
Disaggregation of revenue
In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.
| In thousands of US dollars ($) | Three Months Ended March 31, | |||||||
| Primary geographical markets | 2023 | 2022 | ||||||
| North America | $ | $ | ||||||
| Europe | ||||||||
| Asia | ||||||||
| $ | $ | |||||||
Three Months Ended March 31, | ||||||||
| Major products/services lines | 2023 | 2022 | ||||||
| Hardware | $ | $ | ||||||
| Consumables | ||||||||
| Contract research services | ||||||||
| Sample preparation accessories | ||||||||
| Agrochem products | ||||||||
| Technical support/extended service contracts | ||||||||
| Shipping and handling | ||||||||
| Other | ||||||||
| $ | $ | |||||||
Three Months Ended March 31, | ||||||||
| Timing of revenue recognition | 2023 | 2022 | ||||||
| Products transferred at a point in time | $ | $ | ||||||
| Services transferred over time | ||||||||
| $ | $ | |||||||
Contract balances
| In thousands of US dollars ($) | March 31, 2023 | December 31, 2022 | ||||||
| Receivables, which are included in ‘Accounts Receivable’ | $ | $ | ||||||
| Contract liabilities (deferred revenue) | ||||||||
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.
| In thousands of US dollars ($) | 2023 | 2024 | Total | |||||||||
| Extended warranty service | $ | $ | $ | |||||||||
All consideration from contracts with customers is included in the amounts presented above.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 10 |
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.
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, 2023 and 2022.
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| Top Five Customers | % | % | ||||||
| Federal Agencies | % | % | ||||||
The following table illustrates the level of concentration as a percentage of net accounts receivable balance as of March 31, 2023 and December 31, 2022. The Top Five Customers category may include federal agency receivable balances if applicable.
| March 31, 2023 | December 31, 2022 | |||||||
| Top Five Customers | % | % | ||||||
| Federal Agencies | % | % | ||||||
Product Supply
In recent years we utilized a contract assembler for our Barocycler® 2320EXT. They provided us with precision manufacturing services that included management support services to meet our specific application and operational requirements. Among the services provided to us were:
| ● | CNC Machining | |
| ● | Contract Assembly & Kitting | |
| ● | Component and Subassembly Design | |
| ● | Inventory Management | |
| ● | ISO certification |
Beginning in July 2021, we brought the assembly of our Barocycler 2320EXT instruments in-house. This became necessary when our independent contract assembler (CBM Industries) informed us that they were about to need 100% of their assembly space for one of their customers, who was in fact one of the largest life science instrument manufacturers in the U.S. We worked with our notified body to gain approval to use both the CE and CSA marks on the instrument, which we received during Q3 2021. Until further notice, we expect to continue to assemble our Barocycler 2320EXT instrument at our South Easton, MA location.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 11 |
We currently manufacture and assemble the Barocycler®, HUB440, HUB880, the SHREDDER SG3, and most of our consumables at our South Easton, MA facility. We will regularly reassess the tradeoffs between in-house assembly versus the benefits of outsourced relationships for of the entire Barocycler® product line, and future instruments.
Investment in Equity Securities
As of March 31, 2023, we held shares of common stock of Nexity Global SA, (a Polish publicly traded company).
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, 2023, 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 $
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.
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| Numerator: | ||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Denominator for basic and diluted loss per share: | ||||||||
| Weighted average common stock shares outstanding | ||||||||
| Loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
The following table presents securities that could potentially dilute basic loss per share in the future. For all periods presented, the potentially dilutive securities were not included in the computation of diluted loss per share because these securities would have been anti-dilutive to our net loss. The Series D Convertible Preferred Stock, Series G Convertible Preferred Stock, Series H and H2 Convertible Preferred Stock, Series J Convertible Preferred Stock, Series K Convertible Preferred Stock, and Series AA Convertible Preferred Stock are presented below as if they were converted into common shares according to the conversion terms.
| As of March 31, | ||||||||
| 2023 | 2022 | |||||||
| Stock options | ||||||||
| Convertible debt | ||||||||
| Common stock warrants | ||||||||
| Convertible preferred stock: | ||||||||
| Series D Convertible Preferred Stock | ||||||||
| Series G Convertible Preferred Stock | ||||||||
| Series H Convertible Preferred Stock | ||||||||
| Series H2 Convertible Preferred Stock | ||||||||
| Series J Convertible Preferred Stock | ||||||||
| Series K Convertible Preferred Stock | ||||||||
| Series AA Convertible Preferred Stock | ||||||||
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 12 |
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, 2023:
| Assumptions | CEO, other Officers and Employees | |||
| Expected life | (yrs) | |||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Forfeiture rate | to | % | ||
| Expected dividend yield | % | |||
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
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 $ and $ for the three months ended March 31, 2023 and 2022, respectively. The following table summarizes the effect of this stock-based compensation expense within each of the line items of our costs and expenses within our Consolidated Statements of Operations:
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cost of sales | $ | $ | ||||||
| Research and development | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Total stock-based compensation expense | $ | $ | ||||||
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” (“ASC 820”) as it related to all financial assets and financial liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 13 |
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, 2023:
Fair value measurements at March 31, 2023 using: | ||||||||||||||||
March 31, 2023 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||
| Equity Securities | $ | $ | ||||||||||||||
| Total Financial Assets | $ | $ | $ | $ | ||||||||||||
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, 2022:
Fair value measurements at December 31, 2022 using: | ||||||||||||||||
December 31, 2022 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||
| Equity Securities | ||||||||||||||||
| Total Financial Assets | $ | $ | $ | $ | ||||||||||||
4) Commitments and Contingencies
Operating Leases
The
Company accounts for its leases under ASC 842. The Company has elected to apply the short-term lease exception to leases of one year
or less. Our corporate office is currently located at 14 Norfolk Avenue, South Easton, Massachusetts 02375. We are currently paying $
We
extended our lease for our space in Medford, MA (the “Medford Lease”) from December 30, 2020 to December 30, 2023. The lease
required monthly payments of $
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 14 |
The
Company accounted for the lease extension of our Medford Lease as a lease modification under ASC 842. At the effective date of modification,
the Company recorded an adjustment to the right-of-use asset and lease liability in the amount of $
The
Company accounted for the Sparks Lease as an operating lease under ASC 842. Upon the commencement of the lease, the Company recorded
a right-of-use asset and lease liability in the amount of $
Following is a schedule by years of future minimum rental payments required under operating leases with initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2023:
| Year | Total | |||
| April 1 - December 31, 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total future undiscounted lease payments | ||||
| Less imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
The
operating cash flows from the operating leases were $
Below is a table for the right of use asset and the corresponding lease liability in the consolidated balance sheets:
| Operating Leases | March 31, 2023 | December 31, 2022 | ||||||
| Right of use asset | $ | $ | ||||||
| Right of use liability, current | $ | $ | ||||||
| Right of use liability, long term | $ | $ | ||||||
| Total lease liability | $ | $ | ||||||
The
weighted-average discount rate is
The
Company had
The components of lease cost for operating leases for the three months ended March 31, 2023 and 2022 are as follows:
| March 31, 2023 | March 31, 2022 | |||||||
| Operating lease cost | $ | $ | ||||||
| Short-term lease cost | ||||||||
| Total lease cost | $ | $ | ||||||
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 15 |
Battelle Memorial Institute
In
December 2008, we entered into an exclusive patent license agreement with the Battelle Memorial Institute (“Battelle”).
The licensed technology is the subject of a patent application filed by Battelle in 2008 and relates to a method and a system for improving
the analysis of protein samples, including through an automated system utilizing pressure and a pre-selected agent to obtain a digested
sample in a significantly shorter period of time than current methods, while maintaining the integrity of the sample throughout the preparatory
process. In addition to royalty payments on net sales on “licensed products,” we are obligated to make minimum royalty payments
for each year that we retain the rights outlined in the patent license agreement and we are required to have our first commercial sale
of the licensed products within one year following the issuance of the patent covered by the licensed technology. After re-negotiating
the terms of the contract in 2013, the minimum annual royalty was $
Target Discovery Inc.
In March 2010, we signed a strategic product licensing, manufacturing, co-marketing, and collaborative research and development agreement with Target Discovery Inc. (“TDI”), a related party. Under the terms of the agreement, we have been licensed by TDI to manufacture and sell an innovative line of chemicals used in the preparation of tissues for scientific analysis (“TDI reagents”). The TDI reagents were designed for use in combination with our pressure cycling technology. The companies believe that the combination of PCT and the TDI reagents can fill an existing need in life science research for an automated method for rapid extraction and recovery of intact, functional proteins associated with cell membranes in tissue samples. We did not incur any royalty obligation under this agreement in 2023 or 2022.
In
April 2012, we signed a non-exclusive license agreement with TDI to grant the non-exclusive use of our pressure cycling technology. We
executed an amendment to this agreement on October 1, 2016 wherein we agreed to pay a monthly fee of $
Severance and Change of Control Agreements
Each of Mr. Schumacher, and Drs. Ting, and Lazarev, executive officers of the Company, are entitled to receive a severance payment if terminated by the Company without cause. The severance benefits would include a payment in an amount equal to one year of such executive officer’s annualized base salary compensation plus accrued paid time off. Additionally, the officer will be entitled to receive medical and dental insurance coverage for one year following the date of termination.
Each of these executive officers, other than Mr. Schumacher, is entitled to receive a change of control payment in an amount equal to one year of such executive officer’s annualized base salary compensation, accrued paid time off, and medical and dental coverage, in the event of their termination upon a change of control of the Company. In the case of Mr. Schumacher, this payment would be equal to two years of annualized base salary compensation, accrued paid time off, and two years of medical and dental coverage. The severance payment is meant to induce the aforementioned executives to remain in the employ of the Company, in general, and particularly in the occurrence of a change in control, as a disincentive to the control change.
5) Debt
Convertible Debt
On
various dates during the three months ended March 31, 2023, the Company issued convertible notes for net proceeds of approximate total of $
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 16 |
For
the three months ended March 31, 2023, deferred financing costs and OID issued with the debt are $
The
summary of specific terms of the convertible notes and outstanding balances as of March 31, 2023 and December 31, 2022 are listed in
the tables below. The convertible notes are from numerous parties and with original issue dates from July, 2019 to March, 2023, and maturity
dates from
| March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Holders | Interest Rate | Conversion Price | Principal | Interest Rate | Conversion Price | Principal | ||||||||||||||||||
| Main Investor | % | $ | $ | % | $ | $ | ||||||||||||||||||
| Others | % | $ | % | $ | ||||||||||||||||||||
| Totals | ||||||||||||||||||||||||
| Discount | ||||||||||||||||||||||||
| Net | $ | | $ | | ||||||||||||||||||||
Notes:
| (1) | ||
| (2) |
| a. | Notes
are convertible before maturity at $ | |
| b. | Notes
are convertible upon an Event of Default at | |
| c. | Notes
are convertible at $ | |
| d. | Notes
can be voluntary converted at lower of 1) $ | |
| e. | Notes
can be voluntary converted at lower of 1) $ | |
| f. | Conversion
price is lower of (i) $ | |
| g. | Note
can be converted at a Voluntary Conversion Price which is the lower of 1) $ | |
| h. | Conversion
price is $ | |
| i. | Notes
can be voluntarily converted before maturity at $ | |
| j. | Notes
can be converted at the lesser of $ per share or | |
| k. | Some
notes are not convertible until 180 days from the date of issuance of the Note and following
an Event of Default will be convertible at the lowest trading price of the 20 days prior
to conversion. The loan with a principal balance of $ | |
| l. | Some
notes can be converted at the lesser of $ per share or |
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 17 |
For
the three months ended March 31, 2023, the Company recognized amortization expense related to the debt discounts indicated above of $
As
of March 31, 2023, the principal balance that are secured by the assets of the Company’s subsidiary, PBI Agrochem, Inc. is $
Standstill and Forbearance Agreements
In
recent years, the Company entered into Standstill and Forbearance Agreements with lenders who hold variable-rate convertible notes. Pursuant
to these agreements the lenders agreed to not convert any portion of their notes into shares of common stock at a variable rate. During
the three months ended March 31, 2023, the Company settled one note with total principal of $
Convertible Loan Modifications and Extinguishments
We refinanced certain convertible loans during the three months ended March 31, 2023 at substantially the same terms for extensions ranging over a period of two to six months. We amortized any remaining unamortized debt discount as of the modification date over the remaining, extended term of the new loans. We applied ASC 470 of modification accounting to the debt instruments which were modified during the quarter or those settled with new notes issued concurrently for the same amounts but different maturity dates. The terms such as the interest rate, prepayment penalties, and default rates will be the same over the new extensions. According to ASC 470, an exchange of debt instruments between or a modification of a debt instrument by a debtor and a creditor in a nontroubled debt situation is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. If the terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is less than 10 percent, the debt instruments are not considered to be substantially different and will be accounted for as modifications.
The
cash flows of new debt exceeded
Other Debt
No notes in Other Debt are past due as of March 31, 2023.
| March 31, 2023 | December 31, 2022 | |||||||||||||||
| Holders | Interest Rate | Principal | Interest Rate | Principal | ||||||||||||
| Non-Convertible | (1 | ) | $ | (1 | ) | $ | ||||||||||
| Merchant debt (3) | ||||||||||||||||
| SBA (2) | % | % | ||||||||||||||
| Totals | $ | |||||||||||||||
| Discount | ||||||||||||||||
| Long Term | ||||||||||||||||
| Short Term | $ | $ | ||||||||||||||
Notes:
| (1) | |
| (2) |
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 18 |
| (3) |
Related Party Notes
| March 31, 2023 | December 31, 2022 | |||||||||||||||||||
| Holders | Interest Rate | Principal | Interest Rate | Principal | Security | |||||||||||||||
| Officers & Directors | (1 | ) | $ | | (1 | ) | $ | | Unsecured | |||||||||||
| Other Related Parties | % | % | Unsecured | |||||||||||||||||
| Totals | ||||||||||||||||||||
| Discount | ||||||||||||||||||||
| Net | $ | $ | ||||||||||||||||||
Notes:
| (1) |
During
the three months ended March 31, 2023, we received short-term convertible loans of $
We
amortized $
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 19 |
6) Stockholders’ Deficit
Preferred Stock
We are authorized to issue shares of preferred stock with a par value of $. Of the shares of preferred stock, the following is outstanding:
| March 31, 2023 | December 31, 2022 | |||||||
| Series D Convertible Preferred Stock, $ par value; shares authorized; shares issued and outstanding on March 31, 2023, and shares issued and outstanding on December 31, 2022 (Liquidation value of $300,000) | $ | $ | ||||||
| Series G Convertible Preferred Stock, $ par value; shares authorized; shares issued and outstanding on March 31, 2023 and shares issued and outstanding on December 31, 2022 | ||||||||
| Series H Convertible Preferred Stock, $ par value; shares authorized; shares issued and outstanding on March 31, 2023 and shares issued and outstanding on December 31, 2022 | ||||||||
| Series J Convertible Preferred Stock, $ par value; shares authorized; shares issued and outstanding on March 31, 2023 and shares issued and outstanding on December 31, 2022 | ||||||||
| Series K Convertible Preferred Stock, $ par value; shares authorized; shares issued and outstanding on March 31, 2023 and shares issued and outstanding on December 31, 2022 | ||||||||
| Series AA Convertible Preferred Stock, $ par value; shares authorized; shares issued and outstanding on March 31, 2023 and December 31, 2022, respectively | ||||||||
| Series H2 Convertible Preferred Stock, $ par value; shares authorized; shares issued and outstanding on March 31, 2023 and shares issued and outstanding on December 31, 2022 | ||||||||
| Series A Junior Participating Preferred Stock, $ par value, shares authorized, shares outstanding | ||||||||
| Series A Convertible Preferred Stock, $ par value, shares authorized, shares outstanding | ||||||||
| Series B Convertible Preferred Stock, $ par value, shares authorized, shares outstanding | ||||||||
| Series C Convertible Preferred Stock, $ par value, shares authorized, shares outstanding | ||||||||
| Series E Convertible Preferred Stock, $ par value, shares authorized, shares outstanding | ||||||||
| Total Convertible Preferred Shares | $ | $ | ||||||
Stock Options and Warrants
At the Company’s December 30, 2021 Special Meeting, the shareholder’s approved the 2021 Equity Incentive Plan (the “2021 Plan”) pursuant to which shares of our common stock were reserved for issuance upon exercise of stock options or other equity awards. Consistent with the Company’s existing 2013 Equity Incentive plan (the “2013 plan”), under the 2021 plan, we may award stock options, shares of common stock, and other equity interests in the Company to employees, officers, directors, consultants, and advisors, and to any other persons the Board of Directors deems appropriate. As of March 31, 2023, options to acquire shares were outstanding under these Plans.
As of March 31, 2023, total unrecognized compensation cost related to the unvested stock-based awards was $, which is expected to be recognized over weighted average period of years. The aggregate intrinsic value associated with the options outstanding and exercisable as of March 31, 2023, based on the March 31, 2023 closing stock price of $, was $.
The following table summarizes information concerning options and warrants outstanding and exercisable:
| Stock Options | Warrants | |||||||||||||||||||||||
| Weighted Average | Weighted Average | Total | ||||||||||||||||||||||
| Shares | price per share | Shares | price per share | Shares | Exercisable | |||||||||||||||||||
| Balance outstanding, December 31, 2022 | $ | | $ | | ||||||||||||||||||||
| Granted | | |||||||||||||||||||||||
| Exercised | ( | ) | ( | ) | ||||||||||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||||||||||
| Forfeited | ||||||||||||||||||||||||
| Balance outstanding, March 31, 2023 | $ | $ | ||||||||||||||||||||||
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 20 |
As of March 31, 2023, the options outstanding have a $ weighted average exercise price and years of weighted average remaining life for outstanding options and years of weighted average remaining life for exercisable options. Of these options, are currently exercisable.
As of March 31, 2023, the warrants outstanding have a $ weighted average exercise price.
Common Stock and Warrant Issuances
During
the three months ended March 31, 2023, the Company accrued approximately $
During the three months ended March 31, 2023 the Company issued a total of shares of restricted common stock to accredited investors and consultants, with the following detail:
| ● |
shares of common stock with a fair value of $ | |
| ● |
shares with a fair value of $ | |
| ● |
shares with a fair value of $ | |
| ● | shares for stock option exercises (at an exercise price of $ per share); | |
| ● |
shares with a fair value of $ | |
| ● |
shares with a fair value of $ | |
| ● |
shares with a fair value of $ | |
| ● |
shares with a fair value of $ | |
| ● | shares for the conversion of preferred stock to common stock. |
During
the three months ended March 31, 2023, the Company issued warrants (five-year term at a $
On
various dates in the three months ended March 31, 2022 the Company issued a total of shares of restricted common stock to accredited
investors and consultants. of the shares with a fair value of $
During
the three months ended March 31, 2022, we issued warrants (three-year term at a $
7) Subsequent Events
From
April 1, 2023 through May 10, 2023 the Company entered into five (5) new merchant cash loan agreements collecting approximately
$
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 21 |
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:
| ● | our need for, and our ability to raise, additional equity or debt financing on acceptable terms, if at all; | |
| ● | our need to take additional cost reduction measures, cease operations or sell our operating assets, if we are unable to obtain sufficient additional financing; | |
| ● | our belief that we will have sufficient liquidity to finance normal operations for the foreseeable future; | |
| ● | the options we may pursue in light of our financial condition; | |
| ● | the potential applications for Ultra Shear Technology (UST); | |
| ● | the potential applications of the BaroFold high-pressure protein refolding and disaggregation technology | |
| ● | the amount of cash necessary to operate our business; | |
| ● | the anticipated uses of grant revenue and the potential for increased grant revenue in future periods; | |
| ● | our plans and expectations with respect to our continued operations; | |
| ● | the expected number of pressure cycling technology (“PCT”) and constant pressure (“CP”) based units that we believe will be installed and the expected revenues from the sale of consumable products, extended service contracts, and biopharma contract services; | |
| ● | our belief that PCT has achieved initial market acceptance in the mass spectrometry and other markets; | |
| ● | the expected development and success of new instrument and consumables product offerings; | |
| ● | the potential applications for our instrument and consumables product offerings; | |
| ● | the expected expenses of, and benefits and results from, our research and development efforts; | |
| ● | the expected benefits and results from our collaboration programs, strategic alliances and joint ventures; | |
| ● | our expectation of obtaining additional research grants from the government in the future; | |
| ● | our expectations of the results of our development activities funded by government research grants; | |
| ● | the potential size of the market for biological sample preparation, biopharma contract services and Ultra Shear Technology; | |
| ● | general economic conditions; | |
| ● | the anticipated future financial performance and business operations of our company; | |
| ● | our reasons for resources expended in the market for genomic, proteomic, lipidomic and small molecule sample preparation; | |
| ● | the importance of mass spectrometry as a laboratory tool; | |
| ● | the advantages of PCT over other current technologies as a method of biological sample preparation and protein characterization in biomarker discovery, forensics, and histology, as well as for other applications; | |
| ● | the capabilities and benefits of our PCT Sample Preparation System, consumables and other products; | |
| ● | our belief that laboratory scientists will achieve results comparable with those reported to date by certain research scientists who have published or presented publicly on PCT and our other products and services; | |
| ● | our ability to retain our core group of scientific, administrative and sales personnel; and | |
| ● | our ability to expand our customer base in sample preparation and for other applications of PCT, as well as for our other products and services in both the BaroFold and Ultra Shear Technology areas. |
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. | March 31, 2023 10Q Report | 22 |
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) Pressure Cycling Technology (“PCT”), (ii) BaroFold Technology (“BaroFold”), and (iii) Ultra Shear Technology (“UST”).
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. Although this premise has been proven true, and although PBI has been successful in installing its PCT Platform in the laboratories of key opinion leaders worldwide, the Company now believes – based on market feedback – that the commercial potential for its UST Platform far exceeds the potential of the PCT Platform. Consequently, in January 2022, PBI made the critical decision to immediately shift its primary business focus from PCT to its innovative UST Platform.
The UST Platform (7 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), therapeutics (e.g., prednisone), and other active ingredients (e.g., retinol, astaxanthin) into long-term stable, effectively water-soluble, highly bioavailable, oil-in-water nanoemulsion formulations. The Company began commercialization of the UST Platform in May 2022, and executed agreements have subsequently been announced with three CBD companies and one cosmeceutical/skincare company for commercialization in Q4 2022.
The BaroFold Platform (8 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 (15 issued patents) uses alternating cycles of hydrostatic pressure between ambient and ultra-high pressures to control bio-molecular interactions safely and reproducibly in the area of 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 primary focus is on making our recently released, 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 May 8, 2023, we accomplished the following:
| ● | April 21, 2023: PBIO unveils powerful THC market leapfrog opportunity with exclusive licensing of UltraShear nanoemulsion processing platform. | |
| ● | April 18: PBIO announces expansion into strategic manufacturing facilities with premier process tech company. | |
| ● | April 14: PBIO reports Q4 and FY 2022 financial results – offers guidance for a strong 2023. | |
| ● | April 6, 2023: PBIO and NutraLife Biosciences renew partnership for development and distribution of next generation nutraceuticals. | |
| ● | March 28: Company reports fresh sales momentum for PBI Agrochem. | |
| ● | March 22: PBIO receives $1.5 million contract for UltraShear nanoemulsified CBD. | |
| ● | March 1: Company announces the exchange of over $10 million of debt into equity. | |
| ● | February 1: Company receives record order (nearly $600,000) for 16 PCT instruments. | |
| ● | January 27: PBIO and One World Products partner to develop CBD-Nano sports performance/recovery drink. | |
| ● | January 19: Dramatic consumer testing results confirm UltraShear nanoemulsion oral spray delivers first effects and maximization in lightning speed – simple, reliable dosing delivers profoundly improved results. |
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 23 |
Results of Operations
The following disclosure compares the results of operations for the quarter ended March 31, 2023 (“Q1 2023”) with March 31, 2022 (“Q1 2022”).
Products and Services Revenue
We recognized total revenue of $740,600 for Q1 2023 compared to $480,000 for Q1 2022, a 54% increase. This increase in revenue was primarily attributable to a $208,350 increase in sales of PCT instrumentation and consumables and an increase of $47,388 of PBI Agrochem products.
Cost of Products and Services
The cost of products and services was $358,628 for Q1 2023 compared to $314,363 for Q1 2022. Gross profit margin on products and services increased to 52% in Q1 2023 compared to 35% in Q1 2022. The increase in gross profit margin was attributable to approximately $130,000 of Agrochem products sold in Q12023 at no cost due to 2022 inventory write-off and approximately $43,000 of freight charges in Q12022 to receive Agrochem products.
Research and Development
Research and development expenses were $435,646 for Q1 2023 compared to $281,589 for Q1 2022. The reported increase was 55% and was mainly due to approximately $171,000 of stock-based compensation expense for employee stock options issued in Q12023.
Selling and Marketing
Selling and marketing expenses were $226,015 for Q1 2023 compared to $66,462 for Q1 2022. The reported increase was primarily attributable to approximately $72,000 of stock-based compensation expense for employee stock options issued in Q12023 and the hiring of one Marketing FTE in Q22022.
General and Administrative
General and administrative expenses were $3,358,056 for Q1 2023 compared to $903,885 for Q1 2022, an increase of $2,454,171 or 272%. The increase was primarily due to approximately $1,100,000 of stock-based compensation expense for employee and BOD and financial consultant stock options issued in Q12023 and approximately $1,500,000 of expense for shares/warrants issued to consultants.,
Operating Loss
Operating loss was $3,637,745 for Q1 2023 compared to $1,086,299 for Q1 2022, an increase of $2,551,446 or 235%.
Interest Expense, net
Interest expense was $3,893,686 for Q1 2023 compared to $2,579,161 for Q1 2022. The 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 extensions.
Unrealized gain on investment in equity securities
Unrealized gain on investments in equity securities was $8,061 for Q1 2023 compared to an unrealized gain of $19,138 for Q1 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 $659,277 for Q1 2023 compared to $589,850 of losses for Q1 2022.
Net loss attributable to common stockholders
Net loss attributable to common stockholders was $7,289,641 ($0.46 per share) for Q1 2023 compared to $4,671,834 ($0.48 per share) for Q1 2022. The decrease in loss per share was attributable to an increase in weighted shares outstanding.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 24 |
Liquidity and Financial Condition
We have experienced negative cash flows from operations with respect to our pressure cycling technology business since our inception. As of March 31, 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 $3.3 million in net proceeds from loans in the three months ended March 31, 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 three months ended March 31, 2023 was $422,211 as compared to $756,282 for the three months ended March 31, 2022.
Net cash used in investing activities for the three months ended March 31, 2023 was $3,000 compared to $1,135 in the three months ended March 31, 2022.
Net cash provided by financing activities for the three months ended March 31, 2023 was $660,369 as compared to $743,909 for the three months ended March 31, 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 March 31, 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 March 31, 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 identified a lack of sufficient segregation of duties. Specifically, this material weakness is such that the design over these areas relies primarily on detective controls and could be strengthened by adding preventative controls to properly safeguard Company assets. | |
| ● | Management has identified a lack of sufficient personnel in the accounting function due to our limited resources with appropriate skills, training, and experience to perform the review processes to ensure the complete and proper application of generally accepted accounting principles, particularly as it relates to valuation of warrants and other complex debt /equity transactions. Specifically, this material weakness resulted in audit adjustments to the annual consolidated financial statements and revisions to related disclosures, valuation of warrants and other equity transactions. |
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 25 |
| ● | Limited policies and procedures that cover recording and reporting of financial transactions. | |
| ● | Lack of multiple levels of review over the financial reporting process | |
| We continue to plan to remediate those material weaknesses as follows: | ||
| ● | Improve the effectiveness of the accounting group by augmenting our existing resources with additional consultants or employees to assist in the analysis and recording of complex accounting transactions, and to simultaneously achieve desired organizational structuring for improved segregation of duties. We plan to mitigate this identified deficiency by hiring an independent consultant once we generate significantly more revenue or raise significant additional working capital. | |
| ● | Improve expert review and achieve desired segregation procedures by strengthening cross approval of various functions including quarterly internal audit procedures where appropriate once we generate significantly more revenue or raise significantly more working capital. | |
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 three-month period ended March 31, 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 March 31, 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.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 26 |
On various dates in the three months ended March 31, 2023 the Company issued a total of 4,381,330 of its common shares as follows:
| ● | 117,552 shares from option exercises; | |
| ● | 990,500 shares for professional services; | |
| ● | 566,200 shares for debt extensions; | |
| ● | 203,613 shares for conversion of debt and interest; | |
| ● | 493,540 shares for conversion of preferred stock; | |
| ● | 73,694 shares for dividends paid-in-kind; | |
| ● | 1,111,081 shares for interest paid-in-kind; | |
| ● | 783,150 shares for shares issued with debt, and | |
| ● | 40,000 shares from sale of common shares. |
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.
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 27 |
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.
| PRESSURE BIOSCIENCES, INC. | ||
| Date: May 12, 2023 | By: | /s/ Richard T. Schumacher |
| Richard T. Schumacher | ||
| President & Chief Executive Officer | ||
| (Principal Executive Officer and Principal Financial Officer) | ||
| Pressure BioSciences, Inc. | March 31, 2023 10Q Report | 28 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard T. Schumacher, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Pressure BioSciences, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: May 12, 2023
| /s/ Richard T. Schumacher | |
| Richard T. Schumacher | |
President and Chief Executive Officer Principal Executive Officer |
|
EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard T. Schumacher, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Pressure BioSciences, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: May 12, 2023
| /s/ Richard T. Schumacher | |
| Richard T. Schumacher | |
| Principal Financial Officer |
EXHIBIT 32.1
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
In connection with the Quarterly Report on Form 10-Q of Pressure BioSciences, Inc., a Massachusetts corporation (the “Company”) for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard T. Schumacher, President and Chief Executive Officer of the Company, do hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) that:
| (1) | The Report of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 12, 2023 | By: | /s/ Richard T. Schumacher |
| Richard T. Schumacher | ||
| President & Chief Executive Officer | ||
| (Principal Executive Officer) |
A signed original of this written statement required by Section 906 has been provided to Pressure BioSciences, Inc. and will be retained by Pressure BioSciences, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
In connection with the Quarterly Report on Form 10-Q of Pressure BioSciences, Inc., a Massachusetts corporation (the “Company”) for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard T. Schumacher, Principal Financial Officer of the Company, do hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) that:
| (1) | The Report of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 12, 2023 | By: | /s/ Richard T. Schumacher |
| Richard T. Schumacher | ||
| President & Chief Executive Officer | ||
| (Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to Pressure BioSciences, Inc. and will be retained by Pressure BioSciences, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Cover - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
May 10, 2023 |
|
| Cover [Abstract] | ||
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Quarterly Report | true | |
| Document Transition Report | false | |
| Document Period End Date | Mar. 31, 2023 | |
| Document Fiscal Period Focus | Q1 | |
| Document Fiscal Year Focus | 2023 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity File Number | 001-38185 | |
| Entity Registrant Name | PRESSURE BIOSCIENCES, INC. | |
| Entity Central Index Key | 0000830656 | |
| Entity Tax Identification Number | 04-2652826 | |
| Entity Incorporation, State or Country Code | MA | |
| Entity Address, Address Line One | 14 Norfolk Avenue | |
| Entity Address, City or Town | South Easton | |
| Entity Address, State or Province | MA | |
| Entity Address, Postal Zip Code | 02375 | |
| City Area Code | (508) | |
| Local Phone Number | 230-1828 | |
| Entity Current Reporting Status | Yes | |
| Entity Interactive Data Current | Yes | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Small Business | true | |
| Entity Emerging Growth Company | false | |
| Entity Shell Company | false | |
| Entity Common Stock, Shares Outstanding | 16,772,761 |
Business Overview, Liquidity and Management Plans |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Business Overview, Liquidity and Management Plans | 1) Business Overview, Liquidity and Management Plans
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) Pressure Cycling Technology (“PCT”), (ii) BaroFold Technology (“BaroFold”), and (iii) Ultra Shear Technology (“UST”).
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. Although this premise has been proven true, and although PBI has been successful in installing its PCT Platform in the laboratories of key opinion leaders worldwide, the Company now believes – based on market feedback – that the commercial potential for its UST Platform far exceeds the potential of the PCT Platform. Consequently, in January 2022, PBI made the critical decision to immediately shift its primary business focus from PCT to its innovative UST Platform.
The UST Platform (7 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), therapeutics (e.g., prednisone), and other active ingredients (e.g., retinol, astaxanthin) into long-term stable, effectively water-soluble, highly bioavailable, oil-in-water nanoemulsion formulations. The Company began commercialization of the UST Platform in May 2022, and executed agreements have subsequently been announced with three CBD companies and one cosmeceutical/skincare company for commercialization in Q4 2022.
The BaroFold Platform (8 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 (15 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 primary focus is on making our recently released, 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.
|
Going Concern |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Going Concern | 2) Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, we have experienced losses from operations and negative cash flows from operations with respect to our pressure cycling technology business since our inception. As of March 31, 2023, we do not have adequate working capital resources to satisfy our current liabilities and as a result, there is substantial doubt regarding our ability to continue as a going concern. We have been successful in raising debt and equity capital in the past and as described in Notes 5 and 6. In addition we raised debt and equity capital after March 31, 2023 as described in Note 7. We have financing efforts in place to continue to raise cash through debt and equity offerings. Although we have successfully completed financings and reduced expenses in the past, we cannot assure you that our plans to address these matters in the future will be successful. These financial statements do not include any adjustments that might result from this uncertainty.
|
Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2022. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2023.
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. Global concerns about the COVID-19 pandemic have adversely affected, and we expect will continue to adversely affect, our business, financial condition and results of operations including the estimates and assumptions made by management. Significant estimates and assumptions include valuations of share-based awards, investments in equity securities and intangible asset impairment. Actual results could differ from the estimates, and such differences may be material to the Company’s consolidated financial statements.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes the beneficial conversion separation model for convertible debt. As a result, after adopting the guidance, entities will no longer account for beneficial conversion features in equity. The guidance is effective for public business entities, other than small reporting company’s financial statements starting January 1, 2022, with early adoption permitted. The Company is a small reporting company and early adopted the new guidance on January 1, 2022 using the modified retrospective approach and recorded a cumulative effect of adoption equal to a $2,728,243 decrease in additional paid in capital and a $2,255,216 decrease in accumulated deficit. There is no material impact to the Company’s statements of operations or cash flows as the result of the adoption of ASU 2020-06.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which requires measurement and recognition of expected credit losses for financial assets held. We adopted this new accounting guidance effective January 1, 2023. The adoption did not have a material impact on our consolidated financial statements and disclosures and did not significantly impact the Company’s accounting policies or estimation methods related to the allowance for doubtful accounts. The Company does not have any reserve for doubtful accounts due to its customers being distributors, universities, research organizations and government agencies. In the past several years, all its customers have paid in full without any need for a write-down.
Principles of Consolidation
The consolidated financial statements include the accounts of Pressure BioSciences, Inc., and its wholly owned subsidiaries PBI BioSeq, Inc. and PBI Agrochem, Inc. All intercompany accounts and transactions have been eliminated in consolidation.
Revenue Recognition
We recognize revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, and ASC 340-40, Other Assets and Deferred Costs—Contracts with Customers. Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We enter into sales contracts that may consist of multiple distinct performance obligations where certain performance obligations of the sales contract are not delivered in one reporting period. We measure and allocate revenue according to ASC 606-10.
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:
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.
Disaggregation of revenue
In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.
Contract balances
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.
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.
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, 2023 and 2022.
The following table illustrates the level of concentration as a percentage of net accounts receivable balance as of March 31, 2023 and December 31, 2022. The Top Five Customers category may include federal agency receivable balances if applicable.
Product Supply
In recent years we utilized a contract assembler for our Barocycler® 2320EXT. They provided us with precision manufacturing services that included management support services to meet our specific application and operational requirements. Among the services provided to us were:
Beginning in July 2021, we brought the assembly of our Barocycler 2320EXT instruments in-house. This became necessary when our independent contract assembler (CBM Industries) informed us that they were about to need 100% of their assembly space for one of their customers, who was in fact one of the largest life science instrument manufacturers in the U.S. We worked with our notified body to gain approval to use both the CE and CSA marks on the instrument, which we received during Q3 2021. Until further notice, we expect to continue to assemble our Barocycler 2320EXT instrument at our South Easton, MA location.
We currently manufacture and assemble the Barocycler®, HUB440, HUB880, the SHREDDER SG3, and most of our consumables at our South Easton, MA facility. We will regularly reassess the tradeoffs between in-house assembly versus the benefits of outsourced relationships for of the entire Barocycler® product line, and future instruments.
Investment in Equity Securities
As of March 31, 2023, we held shares of common stock of Nexity Global SA, (a Polish publicly traded company).
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, 2023, 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 $71,699. We recorded $8,061 as an unrealized gain during the three months ended March 31, 2023 for changes in market value.
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 presents securities that could potentially dilute basic loss per share in the future. For all periods presented, the potentially dilutive securities were not included in the computation of diluted loss per share because these securities would have been anti-dilutive to our net loss. The Series D Convertible Preferred Stock, Series G Convertible Preferred Stock, Series H and H2 Convertible Preferred Stock, Series J Convertible Preferred Stock, Series K Convertible Preferred Stock, and Series AA Convertible Preferred Stock are presented below as if they were converted into common shares according to the conversion terms.
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, 2023:
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% for awards granted based on historical experience and future expectations of options vesting. The Company used this historical rate as our assumption in calculating future stock-based compensation expense.
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 $ and $ for the three months ended March 31, 2023 and 2022, respectively. The following table summarizes the effect of this stock-based compensation expense within each of the line items of our costs and expenses within our Consolidated Statements of Operations:
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” (“ASC 820”) as it related to all financial assets and financial liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.
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, 2023:
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, 2022:
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Commitments and Contingencies |
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| Commitments and Contingencies | 4) Commitments and Contingencies
Operating Leases
The Company accounts for its leases under ASC 842. The Company has elected to apply the short-term lease exception to leases of one year or less. Our corporate office is currently located at 14 Norfolk Avenue, South Easton, Massachusetts 02375. We are currently paying $7,650 per month, on a lease extension, signed on December 5, 2022, that expires December 31, 2023, for our corporate office. We expanded our space to include offices, warehouse and a loading dock on the first floor starting May 1, 2017 with a monthly rent increase already reflected in the current payments.
We extended our lease for our space in Medford, MA (the “Medford Lease”) from December 30, 2020 to December 30, 2023. The lease required monthly payments of $7,282 subject to annual cost of living increases. The lease shall be automatically extended for additional three years unless either party terminates at least six months prior to the expiration of the current lease term.
The Company accounted for the lease extension of our Medford Lease as a lease modification under ASC 842. At the effective date of modification, the Company recorded an adjustment to the right-of-use asset and lease liability in the amount of $221,432 based on the net present value of lease payments discounted using an estimated borrowing rate of 12%.
On August 9, 2021, we entered into an operating lease agreement for our warehouse space in Sparks, NV (the “Sparks Lease”) for the period from September 1, 2021 through September 30, 2026. The lease contains escalating payments during the lease period. The lease can be extended for an additional three years if the Company provides notice at least six months prior to the expiration of the current lease term.
The Company accounted for the Sparks Lease as an operating lease under ASC 842. Upon the commencement of the lease, the Company recorded a right-of-use asset and lease liability in the amount of $239,327 based on the net present value of lease payments discounted using an estimated borrowing rate of 12%.
Following is a schedule by years of future minimum rental payments required under operating leases with initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2023:
The operating cash flows from the operating leases were $90,279 for the three months ended March 31, 2023 and $26,559 for the three months ended March 31, 2022. The weighted-average remaining lease term (years) of the above leases is 2.84 year as of March 31, 2023.
Below is a table for the right of use asset and the corresponding lease liability in the consolidated balance sheets:
The weighted-average discount rate is 12%.
The Company had no financing lease during the three months ended March 31, 2023 and 2022.
The components of lease cost for operating leases for the three months ended March 31, 2023 and 2022 are as follows:
Battelle Memorial Institute
In December 2008, we entered into an exclusive patent license agreement with the Battelle Memorial Institute (“Battelle”). The licensed technology is the subject of a patent application filed by Battelle in 2008 and relates to a method and a system for improving the analysis of protein samples, including through an automated system utilizing pressure and a pre-selected agent to obtain a digested sample in a significantly shorter period of time than current methods, while maintaining the integrity of the sample throughout the preparatory process. In addition to royalty payments on net sales on “licensed products,” we are obligated to make minimum royalty payments for each year that we retain the rights outlined in the patent license agreement and we are required to have our first commercial sale of the licensed products within one year following the issuance of the patent covered by the licensed technology. After re-negotiating the terms of the contract in 2013, the minimum annual royalty was $1,200 in 2014 and $2,000 in 2015; the minimum royalties were $3,000 in 2016, $4,000 in 2017 and $5,000 in 2018 and each calendar year thereafter during the term of the agreement.
Target Discovery Inc.
In March 2010, we signed a strategic product licensing, manufacturing, co-marketing, and collaborative research and development agreement with Target Discovery Inc. (“TDI”), a related party. Under the terms of the agreement, we have been licensed by TDI to manufacture and sell an innovative line of chemicals used in the preparation of tissues for scientific analysis (“TDI reagents”). The TDI reagents were designed for use in combination with our pressure cycling technology. The companies believe that the combination of PCT and the TDI reagents can fill an existing need in life science research for an automated method for rapid extraction and recovery of intact, functional proteins associated with cell membranes in tissue samples. We did not incur any royalty obligation under this agreement in 2023 or 2022.
In April 2012, we signed a non-exclusive license agreement with TDI to grant the non-exclusive use of our pressure cycling technology. We executed an amendment to this agreement on October 1, 2016 wherein we agreed to pay a monthly fee of $1,400 for the use of a lab bench, shared space, and other utilities, and $2,000 per day for technical support services as needed. The agreement requires TDI to pay the Company a minimum royalty fee of $60,000 in 2022 and $60,000 in 2023. For the three months ended March 31, 2023 and March 31, 2022, the Company reported $15,450 and $17,700, respectively in TDI fees.
Severance and Change of Control Agreements
Each of Mr. Schumacher, and Drs. Ting, and Lazarev, executive officers of the Company, are entitled to receive a severance payment if terminated by the Company without cause. The severance benefits would include a payment in an amount equal to one year of such executive officer’s annualized base salary compensation plus accrued paid time off. Additionally, the officer will be entitled to receive medical and dental insurance coverage for one year following the date of termination.
Each of these executive officers, other than Mr. Schumacher, is entitled to receive a change of control payment in an amount equal to one year of such executive officer’s annualized base salary compensation, accrued paid time off, and medical and dental coverage, in the event of their termination upon a change of control of the Company. In the case of Mr. Schumacher, this payment would be equal to two years of annualized base salary compensation, accrued paid time off, and two years of medical and dental coverage. The severance payment is meant to induce the aforementioned executives to remain in the employ of the Company, in general, and particularly in the occurrence of a change in control, as a disincentive to the control change.
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 5) Debt
Convertible Debt
On various dates during the three months ended March 31, 2023, the Company issued convertible notes for net proceeds of approximate total of $2.5 million which contained varied terms and conditions as follows: a) 4-12 month maturity date; b) interest rates of 0-120%; c) convertible to the Company’s common stock at issuance at a fixed rate of $2.50 or at variable conversion rates upon the Company’s up-listing to NASDAQ or NYSE or an event of default. These notes were issued with shares of common stock that were fair valued at issuance date. The aggregate relative fair value of the shares of common stock issued with the notes of $1,087,751 was recorded as a debt discount to be amortized over the term of the notes. We also evaluated the convertible notes for derivative liability treatment and determined that the notes did not qualify for derivative accounting treatment on March 31, 2023.
For the three months ended March 31, 2023, deferred financing costs and OID issued with the debt are $535,250 and the Company repaid $1,628,474.
The summary of specific terms of the convertible notes and outstanding balances as of March 31, 2023 and December 31, 2022 are listed in the tables below. The convertible notes are from numerous parties and with original issue dates from July, 2019 to March, 2023, and maturity dates from July, 2020 to March, 2024. There are approximately $14 million of notes that are past due as of March 31, 2023.
Notes:
For the three months ended March 31, 2023, the Company recognized amortization expense related to the debt discounts indicated above of $512,781. The unamortized debt discounts as of March 31, 2023 related to the convertible notes amounted to $1,673,288.
As of March 31, 2023, the principal balance that are secured by the assets of the Company’s subsidiary, PBI Agrochem, Inc. is $352,188.
Standstill and Forbearance Agreements
In recent years, the Company entered into Standstill and Forbearance Agreements with lenders who hold variable-rate convertible notes. Pursuant to these agreements the lenders agreed to not convert any portion of their notes into shares of common stock at a variable rate. During the three months ended March 31, 2023, the Company settled one note with total principal of $302,484, leaving one final lender (three notes) with total principal of $272,500 outstanding and incurred interest, penalties and fees of approximately $142,247 in connection with the Standstill and Forbearance Agreements.
Convertible Loan Modifications and Extinguishments
We refinanced certain convertible loans during the three months ended March 31, 2023 at substantially the same terms for extensions ranging over a period of two to six months. We amortized any remaining unamortized debt discount as of the modification date over the remaining, extended term of the new loans. We applied ASC 470 of modification accounting to the debt instruments which were modified during the quarter or those settled with new notes issued concurrently for the same amounts but different maturity dates. The terms such as the interest rate, prepayment penalties, and default rates will be the same over the new extensions. According to ASC 470, an exchange of debt instruments between or a modification of a debt instrument by a debtor and a creditor in a nontroubled debt situation is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. If the terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is less than 10 percent, the debt instruments are not considered to be substantially different and will be accounted for as modifications.
The cash flows of new debt exceeded 10% of the remaining cash flows of the original debt on several loans. During the three months ended March 31, 2023 we recorded gains on extinguishment of liabilities of approximately $0.7 million by calculating the difference of the fair value of the new debt and the carrying value of the old debt. During the three months ended March 31, 2023, the Company extended 5 loans totaling $1,354,438 and increased the principal to$1,363,438. The Company issued shares of common stock for these extensions and added principal.
Other Debt
No notes in Other Debt are past due as of March 31, 2023.
Notes:
Related Party Notes
Notes:
During the three months ended March 31, 2023, we received short-term convertible loans of $93,200 with $5,000 OID from related parties and repaid $99,000 of related party loans. These notes bear interest of 12% to 120% and are due upon demand. All related party notes are convertible at $2.50 share.
We amortized $102,226 of debt discounts during the three months ended March 31, 2023 for all non-convertible and related party notes. The total unamortized discount for all non-convertible and related party convertible notes as of March 31, 2023, and December 31, 2022 was $490,387 and $7,915, respectively.
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Stockholders’ Deficit |
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Deficit | 6) Stockholders’ Deficit
Preferred Stock
We are authorized to issue shares of preferred stock with a par value of $. Of the shares of preferred stock, the following is outstanding:
Stock Options and Warrants
At the Company’s December 30, 2021 Special Meeting, the shareholder’s approved the 2021 Equity Incentive Plan (the “2021 Plan”) pursuant to which shares of our common stock were reserved for issuance upon exercise of stock options or other equity awards. Consistent with the Company’s existing 2013 Equity Incentive plan (the “2013 plan”), under the 2021 plan, we may award stock options, shares of common stock, and other equity interests in the Company to employees, officers, directors, consultants, and advisors, and to any other persons the Board of Directors deems appropriate. As of March 31, 2023, options to acquire shares were outstanding under these Plans.
As of March 31, 2023, total unrecognized compensation cost related to the unvested stock-based awards was $, which is expected to be recognized over weighted average period of years. The aggregate intrinsic value associated with the options outstanding and exercisable as of March 31, 2023, based on the March 31, 2023 closing stock price of $, was $.
The following table summarizes information concerning options and warrants outstanding and exercisable:
As of March 31, 2023, the options outstanding have a $ weighted average exercise price and years of weighted average remaining life for outstanding options and years of weighted average remaining life for exercisable options. Of these options, are currently exercisable.
As of March 31, 2023, the warrants outstanding have a $ weighted average exercise price.
Common Stock and Warrant Issuances
During the three months ended March 31, 2023, the Company accrued approximately $1,705,234 in interest expense for these obligations to issue common stock. During the three months ended March 31, 2022, the Company accrued $1,173,458 million in interest expense for these obligations to issue common stock.
During the three months ended March 31, 2023 the Company issued a total of shares of restricted common stock to accredited investors and consultants, with the following detail:
During the three months ended March 31, 2023, the Company issued warrants (five-year term at a $3.50 exercise price) to acquire common stock at a fair value of $61,609 to a consultant for professional services.
On various dates in the three months ended March 31, 2022 the Company issued a total of shares of restricted common stock to accredited investors and consultants. of the shares with a fair value of $350,500 were issued for the conversion of debt and interest for common stock, of the shares with a fair value of $1,173,458 were issued for interest paid-in-kind, of the shares with a fair value of $77,700 were issued for services rendered, shares with a fair value of $64,256 for dividends paid-in-kind, shares with a fair value of $142,480 for new convertible debt issuances and shares with a fair value of $472,900 for debt extension.
During the three months ended March 31, 2022, we issued warrants (three-year term at a $3.50 exercise price) to acquire common stock at a fair value of $87,436 to a lender in conjunction with signing of new convertible loans. We also issued warrants (three-year term at a $3.50 exercise price) with a fair value of $39,761 for services rendered and warrants (three-year term at a $3.50 exercise price) with a fair value of $132,537 for debt extension.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | 7) Subsequent Events
From April 1, 2023 through May 10, 2023 the Company entered into five (5) new merchant cash loan agreements collecting approximately $1.0 million (obligating the Company to repay approximately $58,000 per week for 6 months to 18 months) and issued two (2) convertible loans with a principal balance of $309,000. The terms of the notes are 3-12 months with an interest rate of 5% to 5.77% and convertible into the Company’s common stock at a fixed rate of $2.50 per share. In this time the Company also issued shares of common stock and shares of Series BB preferred stock with the convertible loans, shares of common stock for accrued interest paid-in-kind and repaid a $300,000 convertible note on April 4, 2023. |
Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | 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, 2022. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2023.
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| Use of Estimates | 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. Global concerns about the COVID-19 pandemic have adversely affected, and we expect will continue to adversely affect, our business, financial condition and results of operations including the estimates and assumptions made by management. Significant estimates and assumptions include valuations of share-based awards, investments in equity securities and intangible asset impairment. Actual results could differ from the estimates, and such differences may be material to the Company’s consolidated financial statements.
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes the beneficial conversion separation model for convertible debt. As a result, after adopting the guidance, entities will no longer account for beneficial conversion features in equity. The guidance is effective for public business entities, other than small reporting company’s financial statements starting January 1, 2022, with early adoption permitted. The Company is a small reporting company and early adopted the new guidance on January 1, 2022 using the modified retrospective approach and recorded a cumulative effect of adoption equal to a $2,728,243 decrease in additional paid in capital and a $2,255,216 decrease in accumulated deficit. There is no material impact to the Company’s statements of operations or cash flows as the result of the adoption of ASU 2020-06.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which requires measurement and recognition of expected credit losses for financial assets held. We adopted this new accounting guidance effective January 1, 2023. The adoption did not have a material impact on our consolidated financial statements and disclosures and did not significantly impact the Company’s accounting policies or estimation methods related to the allowance for doubtful accounts. The Company does not have any reserve for doubtful accounts due to its customers being distributors, universities, research organizations and government agencies. In the past several years, all its customers have paid in full without any need for a write-down.
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| Principles of Consolidation | Principles of Consolidation
The consolidated financial statements include the accounts of Pressure BioSciences, Inc., and its wholly owned subsidiaries PBI BioSeq, Inc. and PBI Agrochem, Inc. All intercompany accounts and transactions have been eliminated in consolidation.
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| Revenue Recognition | Revenue Recognition
We recognize revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, and ASC 340-40, Other Assets and Deferred Costs—Contracts with Customers. Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We enter into sales contracts that may consist of multiple distinct performance obligations where certain performance obligations of the sales contract are not delivered in one reporting period. We measure and allocate revenue according to ASC 606-10.
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:
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.
Disaggregation of revenue
In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.
Contract balances
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.
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.
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| Concentrations | 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, 2023 and 2022.
The following table illustrates the level of concentration as a percentage of net accounts receivable balance as of March 31, 2023 and December 31, 2022. The Top Five Customers category may include federal agency receivable balances if applicable.
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| Product Supply | Product Supply
In recent years we utilized a contract assembler for our Barocycler® 2320EXT. They provided us with precision manufacturing services that included management support services to meet our specific application and operational requirements. Among the services provided to us were:
Beginning in July 2021, we brought the assembly of our Barocycler 2320EXT instruments in-house. This became necessary when our independent contract assembler (CBM Industries) informed us that they were about to need 100% of their assembly space for one of their customers, who was in fact one of the largest life science instrument manufacturers in the U.S. We worked with our notified body to gain approval to use both the CE and CSA marks on the instrument, which we received during Q3 2021. Until further notice, we expect to continue to assemble our Barocycler 2320EXT instrument at our South Easton, MA location.
We currently manufacture and assemble the Barocycler®, HUB440, HUB880, the SHREDDER SG3, and most of our consumables at our South Easton, MA facility. We will regularly reassess the tradeoffs between in-house assembly versus the benefits of outsourced relationships for of the entire Barocycler® product line, and future instruments.
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| Investment in Equity Securities | Investment in Equity Securities
As of March 31, 2023, we held shares of common stock of Nexity Global SA, (a Polish publicly traded company).
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, 2023, 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 $71,699. We recorded $8,061 as an unrealized gain during the three months ended March 31, 2023 for changes in market value.
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| 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 presents securities that could potentially dilute basic loss per share in the future. For all periods presented, the potentially dilutive securities were not included in the computation of diluted loss per share because these securities would have been anti-dilutive to our net loss. The Series D Convertible Preferred Stock, Series G Convertible Preferred Stock, Series H and H2 Convertible Preferred Stock, Series J Convertible Preferred Stock, Series K Convertible Preferred Stock, and Series AA Convertible Preferred Stock are presented below as if they were converted into common shares according to the conversion terms.
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| 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, 2023:
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% for awards granted based on historical experience and future expectations of options vesting. The Company used this historical rate as our assumption in calculating future stock-based compensation expense.
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 $ and $ for the three months ended March 31, 2023 and 2022, respectively. The following table summarizes the effect of this stock-based compensation expense within each of the line items of our costs and expenses within our Consolidated Statements of Operations:
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| Fair Value of Financial Instruments | 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.
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| Fair Value Measurements | Fair Value Measurements
The Company follows the guidance of FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) as it related to all financial assets and financial liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.
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, 2023:
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, 2022:
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Summary of Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Disaggregation of Revenue | In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.
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| Schedule of Contract Balances | Contract balances
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| Schedule of Future Related to 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.
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| Schedule of Customer Concentration Risk Percentage | The following table illustrates the level of concentration as a percentage of total revenues during the three months ended March 31, 2023 and 2022.
The following table illustrates the level of concentration as a percentage of net accounts receivable balance as of March 31, 2023 and December 31, 2022. The Top Five Customers category may include federal agency receivable balances if applicable.
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| Schedule of Computation of Loss Per Share |
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| Schedule of Anti-Dilutive Securities Excluded from Computation of Earnings Per Share |
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| Summary of Assumptions for Grants of Stock Options | 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, 2023:
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| Schedule of Stock Based Compensation Expense |
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| Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2023:
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, 2022:
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Commitments and Contingencies (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Future Minimum Rental Payments Required Under Operating Leases | Following is a schedule by years of future minimum rental payments required under operating leases with initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2023:
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| Schedule of Right of Use Asset and the Corresponding Lease Liability | Below is a table for the right of use asset and the corresponding lease liability in the consolidated balance sheets:
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| Schedule of Lease Cost for Operating Leases | The components of lease cost for operating leases for the three months ended March 31, 2023 and 2022 are as follows:
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Convertible Debts and Outstanding Balances |
Notes:
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| Schedule of Other Debt |
Notes:
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| Schedule of Related Party Debt |
Notes:
During the three months ended March 31, 2023, we received short-term convertible loans of $93,200 with $5,000 OID from related parties and repaid $99,000 of related party loans. These notes bear interest of 12% to 120% and are due upon demand. All related party notes are convertible at $2.50 share.
We amortized $102,226 of debt discounts during the three months ended March 31, 2023 for all non-convertible and related party notes. The total unamortized discount for all non-convertible and related party convertible notes as of March 31, 2023, and December 31, 2022 was $490,387 and $7,915, respectively.
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Stockholders’ Deficit (Tables) |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Preferred Stock Outstanding |
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| Schedule of Concerning Options and Warrants Outstanding and Exercisable | The following table summarizes information concerning options and warrants outstanding and exercisable:
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Schedule of Contract Balances (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Receivables, which are included in ‘Accounts Receivable’ | $ 392 | $ 295 |
| Contract liabilities (deferred revenue) | $ 483 | $ 60 |
Schedule of Future Related to Performance Obligations (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
|---|---|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Extended warranty service | $ 65 |
| 2023 [Member] | |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Extended warranty service | 58 |
| Two Thousand And Twenty Four [Member] | |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Extended warranty service | $ 7 |
Schedule of Customer Concentration Risk Percentage (Details) - Customer Concentration Risk [Member] |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
| Top Five Customers [Member] | Revenue Benchmark [Member] | |||
| Product Information [Line Items] | |||
| Concentration credit risk percentage | 64.00% | 73.00% | |
| Top Five Customers [Member] | Accounts Receivable [Member] | |||
| Product Information [Line Items] | |||
| Concentration credit risk percentage | 92.00% | 93.00% | |
| Federal Agencies [Member] | Revenue Benchmark [Member] | |||
| Product Information [Line Items] | |||
| Concentration credit risk percentage | 1.00% | 0.00% | |
| Federal Agencies [Member] | Accounts Receivable [Member] | |||
| Product Information [Line Items] | |||
| Concentration credit risk percentage | 0.00% | 0.00% | |
Schedule of Computation of Loss Per Share (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Accounting Policies [Abstract] | ||
| Net loss attributable to common stockholders | $ (7,289,641) | $ (4,671,834) |
| Weighted average common stock shares outstanding | 15,839,373 | 9,695,189 |
| Loss per common share – basic and diluted | $ (0.46) | $ (0.48) |
Summary of Assumptions for Grants of Stock Options (Details) - CEO, other Officers and Employees [Member] |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Property, Plant and Equipment [Line Items] | |
| Expected life | 6 years |
| Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 130.50% |
| Risk-free interest rate | 3.90% |
| Expected dividend yield | 0.00% |
| Minimum [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Forfeiture rate | 0.00% |
| Maximum [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Forfeiture rate | 5.00% |
Schedule of Stock Based Compensation Expense (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Total stock-based compensation expense | $ 1,430,244 | $ 64,483 |
| Cost of Sales [Member] | ||
| Total stock-based compensation expense | 53,481 | 4,349 |
| Research and Development Expense [Member] | ||
| Total stock-based compensation expense | 170,620 | 18,909 |
| Selling and Marketing Expense [Member] | ||
| Total stock-based compensation expense | 72,099 | 9,050 |
| General and Administrative Expense [Member] | ||
| Total stock-based compensation expense | $ 1,134,044 | $ 32,175 |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
Aug. 30, 2020 |
|
| Cumulative effect of adoption, adjustment in additional paid in capital | $ 76,428,425 | $ 69,006,145 | $ 2,728,243 | |
| Cumulative effect of adoption, adjustment in accumulated deficit | $ (141,115,846) | $ (133,826,205) | $ 2,255,216 | |
| Forfeiture rate | 5.00% | |||
| Stock-based compensation expense | $ 1,430,244 | $ 64,483 | ||
| Nexity Global SA [Member] | ||||
| Sale of stock number of shares received | 100,250 | |||
| Investment owned, at fair value | $ 71,699 | |||
| Unrealized gain | $ 8,061 | |||
Schedule of Future Minimum Rental Payments Required Under Operating Leases (Details) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| April 1 - December 31, 2023 | $ 149,300 | |
| 2024 | 64,393 | |
| 2025 | 66,969 | |
| 2026 | 51,777 | |
| 2027 | ||
| Total future undiscounted lease payments | 332,439 | |
| Less imputed interest | (177,358) | |
| Present value of lease liabilities | $ 155,081 | $ 282,095 |
Schedule of Right of Use Asset and the Corresponding Lease Liability (Details) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Right of use asset | $ 191,816 | $ 282,095 |
| Right of use liability, current | 65,029 | 142,171 |
| Right of use liability, long term | 90,052 | 139,924 |
| Total lease liability | $ 155,081 | $ 282,095 |
Schedule of Lease Cost for Operating Leases (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Operating lease cost | $ 37,810 | $ 37,810 |
| Short-term lease cost | 20,850 | 20,850 |
| Total lease cost | $ 58,660 | $ 58,660 |
Schedule of Convertible Debts and Outstanding Balances (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|||||
| Debt Instrument [Line Items] | ||||||
| Conversion | $ 2.50 | |||||
| Debt principal amount | $ 19,414,704 | $ 18,279,186 | ||||
| Totals | 1,673,288 | |||||
| Debt unamortized discount | 455,517 | |||||
| Principal amount | $ 17,741,416 | $ 17,823,669 | ||||
| Investor [Member] | ||||||
| Debt Instrument [Line Items] | ||||||
| Interest Rate | 10.00% | 10.00% | ||||
| Conversion | [1] | $ 2.50 | $ 2.50 | |||
| Debt principal amount | $ 9,393,150 | $ 9,393,150 | ||||
| Others [Member] | ||||||
| Debt Instrument [Line Items] | ||||||
| Debt principal amount | $ 10,021,554 | $ 8,886,036 | ||||
| Others [Member] | Minimum [Member] | ||||||
| Debt Instrument [Line Items] | ||||||
| Interest Rate | 0.00% | 0.00% | ||||
| Conversion | [2] | $ 2.50 | $ 2.50 | |||
| Others [Member] | Maximum [Member] | ||||||
| Debt Instrument [Line Items] | ||||||
| Interest Rate | 24.00% | 24.00% | ||||
| Conversion | [2] | $ 7.50 | $ 7.50 | |||
| ||||||
Schedule of Other Debt (Details) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
||||||
|---|---|---|---|---|---|---|---|---|
| Short-Term Debt [Line Items] | ||||||||
| Totals, Principal | $ 1,834,538 | $ 1,788,969 | ||||||
| Long Term, discount | 485,672 | |||||||
| Long Term, Principal | 163,838 | 150,000 | ||||||
| Short Term, Principal | $ 1,185,028 | $ 1,638,969 | ||||||
| Non Convertible [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Interest Rate | [1] | |||||||
| Totals, Principal | $ 866,308 | $ 878,809 | ||||||
| Merchant Debt [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Totals, Principal | [2] | $ 804,392 | $ 760,160 | |||||
| SBA [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Interest Rate | [3] | 3.75% | 3.75% | |||||
| Totals, Principal | [3] | $ 163,838 | $ 150,000 | |||||
| ||||||||
Debt (Details Narrative) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
| Short-Term Debt [Line Items] | |||
| Proceeds from Convertible Debt | $ 2,520,000 | $ 806,000 | |
| Debt Instrument, Convertible, Conversion Price | $ 2.50 | ||
| Deferred Costs | $ 535,250 | ||
| Repayments of Convertible Debt | $ 1,628,474 | 324,350 | |
| Debt instrument maturity date description | July, 2020 to March, 2024 | ||
| Debt instrument, face amount. | $ 14,000,000 | ||
| Unamortized, debt discount | $ 455,517 | ||
| Losses on extinguishment of debt | (1,029,939) | ||
| Repayments of Related Party Debt | $ 99,000 | ||
| Common Stock [Member] | |||
| Short-Term Debt [Line Items] | |||
| Number of shares issued | 568,200 | 214,500 | |
| Three Lenders [Member] | |||
| Short-Term Debt [Line Items] | |||
| Repayments of Convertible Debt | $ 302,484 | ||
| Three Lenders [Member] | Forbearance Agreements [Member] | |||
| Short-Term Debt [Line Items] | |||
| Repayments of Convertible Debt | 272,500 | ||
| Four Lenders [Member] | Forbearance Agreements [Member] | |||
| Short-Term Debt [Line Items] | |||
| Interest Payable | 142,247 | ||
| PBI Agrochem Inc [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt instrument, face amount. | $ 352,188 | ||
| Minimum [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt interest rate | 1.00% | ||
| Maximum [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt interest rate | 10.00% | ||
| Convertible Debt [Member] | |||
| Short-Term Debt [Line Items] | |||
| Proceeds from Convertible Debt | $ 2,500,000 | ||
| Amortized, debt discount | 512,781 | ||
| Unamortized, debt discount | $ 1,673,288 | ||
| Convertible Debt [Member] | Convertible Common Stock [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt Instrument, Convertible, Conversion Price | $ 2.50 | ||
| Convertible Debt, Fair Value Disclosures | $ 1,087,751 | ||
| Convertible Debt [Member] | Minimum [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt instrument term | 4 months | ||
| Debt interest rate | 0.00% | ||
| Convertible Debt [Member] | Maximum [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt instrument term | 12 months | ||
| Debt interest rate | 120.00% | ||
| New Loan [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt interest rate | 10.00% | ||
| Losses on extinguishment of debt | $ 700,000 | ||
| Five Loans [Member] | |||
| Short-Term Debt [Line Items] | |||
| Proceeds from loans | 1,354,438 | ||
| Increase in principal amount | $ 1,363,438 | ||
| Five Loans [Member] | Common Stock [Member] | |||
| Short-Term Debt [Line Items] | |||
| Number of shares issued | 568,200 | ||
| Short-term Non-Convertible Loan [Member] | |||
| Short-Term Debt [Line Items] | |||
| Amortized, debt discount | $ 102,226 | ||
| Unamortized, debt discount | 490,387 | $ 7,915 | |
| Proceeds from Short-Term Debt | 93,200 | ||
| Original issue discount | 5,000 | ||
| Repayments of Related Party Debt | $ 99,000 | ||
| Short-term Non-Convertible Loan [Member] | Minimum [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt interest rate | 12.00% | ||
| Short-term Non-Convertible Loan [Member] | Maximum [Member] | |||
| Short-Term Debt [Line Items] | |||
| Debt interest rate | 120.00% | ||
Schedule of Preferred Stock Outstanding (Details) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | $ 86 | $ 1,098 |
| Series A Junior Participating Preferred Stock, $.01 par value, 20,000 shares authorized, no shares outstanding | 86 | 1,098 |
| Series D Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | $ 3 | |
| Preferred stock, shares outstanding | 75 | 300 |
| Series G Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | $ 806 | |
| Preferred stock, shares outstanding | 0 | 80,570 |
| Series H Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | $ 100 | |
| Preferred stock, shares outstanding | 0 | 10,000 |
| Series J Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | $ 35 | |
| Preferred stock, shares outstanding | 0 | 3,458 |
| Series K Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | $ 68 | |
| Preferred stock, shares outstanding | 0 | 6,880 |
| Series AA Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | $ 86 | $ 86 |
| Preferred stock, shares outstanding | 8,645 | 8,645 |
| Series H2 Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | ||
| Preferred stock, shares outstanding | 0 | 21 |
| Series A Junior Participating Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Series A Junior Participating Preferred Stock, $.01 par value, 20,000 shares authorized, no shares outstanding | ||
| Preferred stock, shares outstanding | 0 | 0 |
| Series A Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | ||
| Preferred stock, shares outstanding | 0 | 0 |
| Series B Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | ||
| Preferred stock, shares outstanding | 0 | 0 |
| Series C Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | ||
| Preferred stock, shares outstanding | 0 | 0 |
| Series E Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Total Convertible Preferred Shares | ||
| Preferred stock, shares outstanding | 0 | 0 |
Schedule Of Preferred Stock Outstanding (Details) (Parenthetical) - $ / shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Series D Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 850 | 850 |
| Preferred stock, shares issued | 75 | 300 |
| Preferred stock, shares outstanding | 75 | 300 |
| Series G Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 240,000 | 240,000 |
| Preferred stock, shares issued | 0 | 80,570 |
| Preferred stock, shares outstanding | 0 | 80,570 |
| Series H Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 10,000 | 10,000 |
| Preferred stock, shares issued | 0 | 10,000 |
| Preferred stock, shares outstanding | 0 | 10,000 |
| Series J Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 6,250 | 6,250 |
| Preferred stock, shares issued | 0 | 3,458 |
| Preferred stock, shares outstanding | 0 | 3,458 |
| Series K Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 15,000 | 15,000 |
| Preferred stock, shares issued | 0 | 6,880 |
| Preferred stock, shares outstanding | 0 | 6,880 |
| Series AA Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 10,000 | 10,000 |
| Preferred stock, shares issued | 8,645 | 8,645 |
| Preferred stock, shares outstanding | 8,645 | 8,645 |
| Series H2 Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 21 | 21 |
| Preferred stock, shares issued | 0 | 21 |
| Preferred stock, shares outstanding | 0 | 21 |
| Series A Junior Participating Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 20,000 | 20,000 |
| Preferred stock, shares outstanding | 0 | 0 |
| Series A Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 313,960 | 313,960 |
| Preferred stock, shares outstanding | 0 | 0 |
| Series B Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, shares authorized | 279,256 | 279,256 |
| Preferred stock, shares outstanding | 0 | 0 |
| Series C Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 88,098 | 88,098 |
| Preferred stock, shares outstanding | 0 | 0 |
| Series E Convertible Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Preferred stock, par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 500 | 500 |
| Preferred stock, shares outstanding | 0 | 0 |
Schedule of Concerning Options and Warrants Outstanding and Exercisable (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
$ / shares
shares
| |
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |
| Shares, Beginning balance | 17,586,591 |
| Exercisable, Beginning balance | 17,570,591 |
| Shares, Granted | 2,330,484 |
| Shares, Exercised | (117,552) |
| Shares, Expired | (161,668) |
| Shares, Forfeited | |
| Shares, Ending balance | 19,637,855 |
| Exercisable, Ending balance | 18,538,573 |
| Stock Options [Member] | |
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |
| Shares, Beginning balance | 1,307,822 |
| Weighted average price per share, Beginning balance | $ / shares | $ 0.72 |
| Shares, Granted | 2,230,484 |
| Weighted average price per share, Granted | $ / shares | $ 1.50 |
| Shares, Exercised | (117,552) |
| Weighted average price per share, Exercised | $ / shares | $ 0.69 |
| Shares, Expired | |
| Weighted average price per share, Expired | $ / shares | |
| Shares, Forfeited | |
| Weighted average price per share, Forfeited | $ / shares | |
| Shares, Ending balance | 3,420,754 |
| Weighted average price per share, Ending balance | $ / shares | $ 1.23 |
| Exercisable, Ending balance | 2,321,472 |
| Warrant [Member] | |
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |
| Shares, Beginning balance | 16,278,769 |
| Weighted average price per share, Beginning balance | $ / shares | $ 3.50 |
| Shares, Granted | 100,000 |
| Weighted average price per share, Granted | $ / shares | $ 3.50 |
| Shares, Exercised | |
| Weighted average price per share, Exercised | $ / shares | |
| Shares, Expired | (161,668) |
| Weighted average price per share, Expired | $ / shares | $ 3.50 |
| Shares, Forfeited | |
| Weighted average price per share, Forfeited | $ / shares | |
| Shares, Ending balance | 16,217,101 |
| Weighted average price per share, Ending balance | $ / shares | $ 3.50 |
Stockholders’ Deficit (Details Narrative) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
Dec. 30, 2021 |
|
| Class of Stock [Line Items] | ||||
| Options outstanding, shares | 19,637,855 | 17,586,591 | ||
| Number of options, exercisable | 18,538,573 | 17,570,591 | ||
| Interest expense | $ 3,893,686 | $ 2,579,161 | ||
| Common stock issued for new convertible debt extension | 1,029,939 | 472,900 | ||
| Number of common stock for services rendered | $ 1,419,335 | 77,700 | ||
| Shares isused for options exercised, shares | 117,552 | |||
| Value of convertible stock | $ 509,033 | $ 350,500 | ||
| Restricted Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Number of restricted shares issued | 1,073,610 | |||
| Lender [Member] | ||||
| Class of Stock [Line Items] | ||||
| Shares issued, price per share | $ 0.69 | |||
| Issued For Services Rendered [Member] | ||||
| Class of Stock [Line Items] | ||||
| Number of common stock for services rendered, shares | 990,500 | 37,000 | ||
| Number of common stock for services rendered | $ 1,419,335 | |||
| Conversion of Debt Extension [Member] | ||||
| Class of Stock [Line Items] | ||||
| Issuance warrants, shares | 203,613 | |||
| Common stock issued for new convertible debt extension | $ 509,033 | |||
| Number of convertible shares issued | 783,150 | 140,200 | ||
| Value of convertible stock | $ 1,087,751 | $ 350,500 | ||
| Debt Settlement [Member] | ||||
| Class of Stock [Line Items] | ||||
| Shares isused for options exercised, shares | 117,552 | |||
| Debt Extension [Member] | ||||
| Class of Stock [Line Items] | ||||
| Issuance warrants, shares | 568,200 | |||
| Common stock issued for new convertible debt extension | $ 1,029,939 | |||
| Number of common stock for services rendered, shares | 100,000 | |||
| New Common Stock Issuances [Member] | ||||
| Class of Stock [Line Items] | ||||
| Issuance warrants, shares | 40,000 | |||
| Common stock issued for new convertible debt extension | $ 100,000 | |||
| Conversion of Preferred to Common Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Number of convertible shares issued | 493,540 | |||
| Payment in Kind (PIK) Note [Member] | ||||
| Class of Stock [Line Items] | ||||
| Issuance warrants, shares | 1,111,081 | 558,100 | ||
| Common stock issued for new convertible debt extension | $ 1,705,234 | $ 1,173,458 | ||
| Dividends Paid In Kind [Member] | ||||
| Class of Stock [Line Items] | ||||
| Issuance warrants, shares | 73,694 | |||
| Common stock issued for new convertible debt extension | $ 102,435 | |||
| Accredited Investor and Consultants [Member] | ||||
| Class of Stock [Line Items] | ||||
| Number of restricted shares issued | 4,381,330 | |||
| Unvested Stock-Based Awards [Member] | ||||
| Class of Stock [Line Items] | ||||
| Unvested stock based awards | $ 1,243,037 | |||
| Unrecognized compensation, period | 2 years 7 months 9 days | |||
| Closing stock price | $ 1.25 | |||
| Options outstanding and exercisable intrinsic value | $ 863,040 | |||
| 2021 Equity Incentive Plan [Member] | ||||
| Class of Stock [Line Items] | ||||
| Common stock, capital shares reserved for future issuance | 3,000,000 | |||
| Options outstanding, shares | 3,420,754 | |||
| Preferred Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Preferred Stock, Shares Issued | 1,000,000 | |||
| Common stock issued for new convertible debt extension | ||||
| Number of common stock for services rendered | ||||
| Value of convertible stock | ||||
| Stock Options [Member] | ||||
| Class of Stock [Line Items] | ||||
| Options outstanding, shares | 3,420,754 | 1,307,822 | ||
| Weighted average exercise price | $ 1.23 | $ 0.72 | ||
| Weighted average remaining term | 8 years 7 months 20 days | |||
| Number of options, exercisable | 2,321,472 | |||
| Shares isused for options exercised, shares | 117,552 | |||
| Exercisable Options [Member] | ||||
| Class of Stock [Line Items] | ||||
| Weighted average remaining term | 8 years 1 month 6 days | |||
| Warrant [Member] | ||||
| Class of Stock [Line Items] | ||||
| Options outstanding, shares | 16,217,101 | 16,278,769 | ||
| Weighted average exercise price | $ 3.50 | $ 3.50 | ||
| Issuance warrants, shares | 100,000 | 100,000 | ||
| Common stock issued for new convertible debt extension | ||||
| Number of common stock for services rendered | ||||
| Shares isused for options exercised, shares | ||||
| Value of convertible stock | ||||
| Strike price, per share | $ 3.50 | $ 3.50 | ||
| Fair value of warrants | $ 61,609 | $ 87,436 | ||
| Warrant [Member] | Issued For Services Rendered [Member] | ||||
| Class of Stock [Line Items] | ||||
| Number of common stock for services rendered, shares | 30,000 | |||
| Fair value of warrants | $ 39,761 | |||
| Warrant [Member] | Debt Extension [Member] | ||||
| Class of Stock [Line Items] | ||||
| Fair value of warrants | 132,537 | |||
| Common Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Interest expense | $ 1,705,234 | $ 1,173,458 | ||
| Issuance warrants, shares | 568,200 | 214,500 | ||
| Common stock issued for new convertible debt extension | $ 5,682 | $ 2,145 | ||
| Number of common stock for services rendered, shares | 990,500 | 37,000 | ||
| Number of common stock for services rendered | $ 9,905 | $ 370 | ||
| Shares isused for options exercised, shares | 117,552 | |||
| Number of convertible shares issued | 203,613 | 140,200 | ||
| Value of convertible stock | $ 2,036 | $ 1,402 | ||
| Common Stock [Member] | Issued For Services Rendered [Member] | ||||
| Class of Stock [Line Items] | ||||
| Fair value of warrants | $ 77,700 | |||
| Common Stock [Member] | Debt Extension [Member] | ||||
| Class of Stock [Line Items] | ||||
| Issuance warrants, shares | 214,500 | |||
| Common stock issued for new convertible debt extension | $ 472,900 | |||
| Common Stock [Member] | New Conversion Debt [Member] | ||||
| Class of Stock [Line Items] | ||||
| Issuance warrants, shares | 92,000 | |||
| Common stock issued for new convertible debt extension | $ 142,480 | |||
| Common Stock [Member] | Payment in Kind (PIK) Note [Member] | ||||
| Class of Stock [Line Items] | ||||
| Issuance warrants, shares | 31,810 | |||
| Common stock issued for new convertible debt extension | $ 64,256 | |||
| Preferred Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Preferred stock, shares authorized | 1,000,000 | |||
| Preferred stock par value per share | $ 0.01 | |||
Subsequent Events (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | ||||
|---|---|---|---|---|---|---|
Apr. 04, 2023 |
May 10, 2023 |
Mar. 31, 2023 |
Mar. 31, 2022 |
Apr. 01, 2023 |
Dec. 31, 2022 |
|
| Subsequent Event [Line Items] | ||||||
| Proceeds from Related Party Debt | $ 88,200 | $ 195,250 | ||||
| Long-Term Debt, Gross | $ 19,414,704 | $ 18,279,186 | ||||
| Subsequent Event [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Proceeds from Loans | $ 300,000 | |||||
| Subsequent Event [Member] | Series B Preferred Stock [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Common stock issued for debt extension, shares | 25 | |||||
| Subsequent Event [Member] | New Merchant Cash Loan [Agreement] | ||||||
| Subsequent Event [Line Items] | ||||||
| Proceeds from Related Party Debt | $ 1,000,000.0 | |||||
| Debt Instrument, Periodic Payment | $ 58,000 | |||||
| Debt Instrument, Frequency of Periodic Payment | for 6 months to 18 months | |||||
| Long-Term Debt, Gross | $ 309,000 | |||||
| Debt Instrument, Description | terms of the notes are 3-12 months with an interest rate of 5% to 5.77% and convertible into the Company’s common stock at a fixed rate of $2.50 per share. | |||||
| Common stock issued for debt extension, shares | 50,000 | |||||
| Subsequent Event [Member] | New Merchant Cash Loan [Agreement] | Accrued Interest Paid In Kind [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Common stock issued for debt extension, shares | 300,000 | |||||