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Summary of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2023
Accounting Policies [Abstract]  
Principles of Consolidation

i. 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.

 

 

Use of Estimates

ii. Use of Estimates

 

To prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, we are required to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In addition, significant estimates were made in deferred tax assets, the costs associated with fulfilling our warranty obligations for the instruments that we sell, and the estimates employed in our calculation of fair value of stock options awarded. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from the estimates and assumptions used.

 

Recent Accounting Pronouncement

iii Recent Accounting Pronouncement

 

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.

 

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, which results in an increase in total stockholder’s deficit of $473,027.

 

Revenue Recognition

iv. 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 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.

 

Most 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, which were nominal in 2023 and 2022.

 

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.

 

Revenue from government grants is recorded when expenses are incurred under the grant in accordance with the terms of the grant award.

 

Deferred revenue represents amounts received from grants and 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.

 

 

[REFER TO 10K TABLES WORK BOOK – REV DETAIL TAB]

Schedule of Disaggregation of Revenue 

In thousands of US dollars ($) 

Year Ended December 31,

 
Primary geographical markets  2023   2022 
North America   1,366    1,191 
Europe   136    144 
Asia   476    394 
    1,978    1,729 

 

In thousands of US dollars ($) 

Year Ended December 31,

 
Major products/services lines  2023   2022 
Hardware   1,160    761 
Consumables   209    257 
Contract research services   86    196 
Agrochem Products   181    165 
Sample preparation accessories   133    132 
Technical support/extended service contracts   156    174 
Shipping and handling   45    42 
Other   8    2 
    1,978    1,729 

 

In thousands of US dollars ($) 

Year Ended December 31,

 
Timing of revenue recognition  2023   2022 
Transferred at a point in time   1,736    1,359 
Transferred over time   242    370 
    1,978    1,729 

 

Contract Balances

Schedule of Contract Balances

In thousands of US dollars ($)  December 31, 2023   December 31, 2022 
Receivables, which are included in ‘Accounts Receivable’   151    295 
Contract liabilities (deferred revenue)   34    60 

 

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 ($)  2024   2025   Total 
Extended warranty service   29    5    34 

 

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.

 

 

Cash and Cash Equivalents

v. Cash and Cash Equivalents

 

Our policy is to invest available cash in short-term, investment grade interest-bearing obligations, including money market funds, and bank and corporate debt instruments. Securities purchased with initial maturities of three months or less are valued at cost plus accrued interest, which approximates fair value, and are classified as cash equivalents.

 

Research and Development

vi. Research and Development

 

Research and development costs, which are comprised of costs incurred in performing research and development activities including wages and associated employee benefits, facilities, consumable products and overhead costs that are expensed as incurred. In support of our research and development activities we utilize our Barocycler instruments that are capitalized as fixed assets and depreciated over their expected useful life.

 

Inventories

vii. Inventories

 

Inventories are valued at the lower of cost (average cost) or net realizable value. The cost of Barocyclers consists of the cost charged by the contract manufacturer. The cost of manufactured goods includes material, freight-in, direct labor, and applicable overhead. The composition of inventory as of December 31, is as follows:

 

   2023   2022 
Raw materials  $63,950   $188,587 
Finished goods   1,262,771    1,480,769 
Inventory reserve   (1,021,812)   (982,973)
Total  $304,909   $686,383 

 

 

Property and Equipment

viii. Property and Equipment

 

Property and equipment are stated at cost, less accumulated depreciation. For financial reporting purposes, depreciation is recognized using the straight-line method, allocating the cost of the assets over their estimated useful lives of three years for certain laboratory equipment, from three to five years for management information systems and office equipment, and three years for all PCT finished units classified as fixed assets.

 

Intangible Assets

ix. Intangible Assets

 

We have classified as intangible assets, costs associated with the fair value of acquired intellectual property. Intangible assets, including patents, are being amortized on a straight-line basis over nine years. We perform an annual review of our intangible assets for impairment. We capitalize any costs to renew or extend the term of our intangible assets. When impairment is indicated, any excess of carrying value over fair value is recorded as a loss. The Company recognized impairment of $230,770 and none for the year ended December 31, 2023 and 2022, respectively. As of December 31, 2023, and 2022, the outstanding balance for intangible assets was $0 and $317,308, respectively.

 

Long-Lived Assets

x. Long-Lived Assets

 

The Company’s long-lived assets are reviewed for impairment in accordance with the guidance of the FASB ASC 360-10-05, Property, Plant, and Equipment, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value.

 

Concentrations

xi. 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 and university labs. Allowances are provided for estimated amounts of accounts receivable which may not be collected. At December 31, 2023, we determined that no allowance against accounts receivable was necessary.

 

The following table illustrates the level of concentration of the below two groups within revenue as a percentage of total revenues during the years ended December 31:

 

   2023   2022 
Top Five Customers   43%   24%
Federal Agencies   4%   0%

 

One customer, our Chinese distributor, accounted for greater than 10% of the total 2023 revenue recorded.

 

The following table illustrates the level of concentration of the below two groups within accounts receivable as a percentage of total accounts receivable balance as of December 31:

 

   2023   2022 
Top Five Customers   96%   93%
Federal Agencies   0%   0%

 

Three customers accounted for greater than 10% of the total accounts receivable balance at December 31, 2023.

 

 

Investment in Equity Securities

 

As of December 31, 2023 and 2022, we held 100,250 shares of common stock of Nexity Global SA, (a Polish publicly traded company). On October 23, 2020 Everest Investments S.A. changed its name to Nexity Global S.A. Nexity is and Everest was listed on the Warsaw Stock Exchange.

 

We had exchanged 33,334 shares of our common stock for the 100,250 shares we had held in Everest (before the Nexity Merger). 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 December 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 $61,876. We recorded $(1,762) as unrealized loss during the year ended December 31, 2023 for changes in market value.

 

As of December 31, 2022, 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 $63,638. We recorded $3,662 as unrealized gain during the year ended December 31, 2022 for changes in market value.

 

Computation of Loss per Share

xii. 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, warrants to acquire preferred stock convertible into common stock, 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. The following table illustrates our computation of loss per share for the years ended December 31:

 

   2023   2022 
Numerator:          
Net loss attributable to common shareholders  $(35,202,434)  $(17,803,953)
           
Denominator for basic and diluted loss per share:          
Weighted average common shares outstanding   23,336,620    11,058,356 
           
Loss per common share - basic and diluted  $(1.51)  $(1.61)

 

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 for the years ended December 31:

   2023   2022 
Stock options   4,920,754    1,307,822 
Convertible debt   8,684,223    6,915,754 
Common stock warrants   15,577,354    16,278,769 
Convertible preferred stock:          
Series D Convertible Preferred   6,250    25,000 
Series G Convertible Preferred   -    26,857 
Series H Convertible Preferred   -    33,334 
Series H2 Convertible Preferred   -    70,000 
Series J Convertible Preferred   -    115,267 
Series K Convertible Preferred   -    229,334 
Series AA Convertible Preferred   8,645,000    8,645,000 
Series BB Convertible Preferred   12,190,000    - 
Series CC Convertible Preferred   4,010,000    - 
Total potentially dilutive shares   54,033,581    33,647,137 

 

Accounting for Income Taxes

xiii. Accounting for Income Taxes

 

We account for income taxes under the asset and liability method, which requires recognition of deferred tax assets, subject to valuation allowances, and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. The Company considers many factors when assessing the likelihood of future realization of our deferred tax assets, including recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carry-forward periods available to us for tax reporting purposes, and other relevant factors. A valuation allowance is established if it is more likely than not that all or a portion of the net deferred tax assets will not be realized. If substantial changes in the Company’s ownership should occur, as defined in Section 382 of the Internal Revenue Code, there could be significant limitations on the amount of net loss carry forwards that could be used to offset future taxable income.

 

 

Tax positions must meet a “more likely than not” recognition threshold at the effective date to be recognized. At December 31, 2023 and 2022, the Company did not have any uncertain tax positions. No interest and penalties related to uncertain tax positions were accrued on December 31, 2023 and 2022.

 

Accounting for Stock-Based Compensation

xiv. Accounting for Stock-Based Compensation

 

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 equity 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. Employee and non-employee awards are accounted for under ASC 718 where the awards are valued at grant date.

 

Determining Fair Value of Stock Option Grants

 

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, which generally is over three years.

 

Expected Term - The Company uses the simplified calculation of expected life, described in the FASB ASC 718, Compensation-Stock Compensation, 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 - As required by FASB ASC 718, Compensation-Stock Compensation, 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. We used this historical rate as our assumption in calculating future stock-based compensation expense.

 

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 year ended December 31, 2023 (there were no options granted in 2022):

 

Assumptions  CEO, other
Officers and
Employees
 
Expected life   6.0(yrs)
Expected volatility   155.02%
Risk-free interest rate   0.62%
Forfeiture rate   5.00%
Expected dividend yield   0.0%

 

We recognized stock-based compensation expense of $2,636,443 and $215,098 for the years ended December 31, 2023 and 2022, respectively. The following table summarizes the effect of this stock-based compensation expense within each of the line items within our accompanying consolidated statements of operations for the years ended December 31:

 

   2023   2022 
Research and development  $536,244   $79,891 
Selling and marketing   155,142    24,687 
General and administrative   1,945,057    110,520 
Total stock-based compensation expense  $2,636,443   $215,098 

 

 

During the years ended December 31, 2023 and December 31, 2022, the total fair value of stock options awarded was $4,090,508 and $0, respectively.

 

As of December 31, 2023, total unrecognized compensation cost related to the unvested stock-based awards was $373,532 which is expected to be recognized over weighted average period of 2.04 years.

 

As of December 31, 2022, total unrecognized compensation cost related to the unvested stock-based awards was $15,312, which is expected to be recognized over weighted average period of 1.09 years.

 

Advertising

xv. Advertising

 

Advertising costs are expensed as incurred. We incurred $342 in 2023 and $487 in 2022 for advertising.

 

Fair Value of Financial Instruments

xvi. 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

xvii. Fair Value Measurements

 

The Company follows the guidance of FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) as it related to financial assets and financial liabilities that are recognized or disclosed at fair value in the consolidated 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 an entity to develop its own assumptions.

 

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 currently classified within Level 1. The Company does not have any financial liabilities that are required to be measured on a recurring basis at December 31, 2023 and 2022.

 

The following tables set forth the Company’s financial assets that were accounted for at fair value on a recurring basis as of December 31, 2023:

 

       Fair value measurements at
December 31, 2023 using:
 
   December 31, 2023   Quoted
prices in
active
markets
(Level 1)
   Significant
other
observable
inputs
(Level 2)
   Significant
unobservable
inputs
(Level 3)
 
Equity Securities  $61,876    61,876    -            - 
Total Financial Assets  $61,876   $61,876   $-  $- 

 

The following tables set forth the Company’s financial assets 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  $63,638   $63,638    -          - 
Total Financial Assets  $63,638   $63,638   $-   $-