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MERRIMAN CAPITAL
Pressure BioSciences, Inc. (PBIO) Spec Buy
Initiating Coverage of PBIO with Spec Buy and $0.70
Price Targ...
Company Description
Pressure Bio, headquartered in South Easton, Massachusetts, is focused on solving the problems inheren...
Figure 1. Barocycler NEP3229
Source: Pressure BioSciences, Inc.
Barocycler® NEP2320
The compact and versatile Barocycler N...
Figure 3. Barocycler HUB440
Source: Pressure BioSciences, Inc.
The PCT Shredder Systems
Pressure Bio's Shredder Systems ar...
Figure 4. The PCT Shredder Figure 5. The SG3 Shredder Figure 6. Shredder Tubes
Source: Pressure BioSciences, Inc.
PCT Micr...
Figure 8. FT500 PULSE Tubes
Source: Pressure BioSciences Inc.
FT500-ND PULSE Tubes
Unlike the FT500 PULSE Tube, the FT500-...
ProteoSolve-TD Kits
Pressure-enhanced kits specially designed for the extraction and solubilization of integral membrane p...
The Company also receives federal agency grants, including National Institutes of Health (NIH) Small Business Innovation R...
(Melbourne, Australia) for its PCT product line, and a non-exclusive agreement for the Shredder SG3 homogenization device ...
On February 12, Pressure Bio announced that Dr. Mickey Urdea had been appointed to its Board of Directors. Dr. Urdea is a ...
On April 18, Pressure Bio issued 200,000 shares of restricted Common Stock to a newly retained investor relations firm for...
Management
Richard T. Schumacher
Founder
President and CEO
Mr. Schumacher, the founder of Pressure BioSciences, has served...
Valuation and Conclusion
Although sales progress has been gradual up until now, the Company has expanded the portfolio for...
2013 2012
Revenue:
PCT products, services, other 221,569$ 164,772$
Grant revenue 149,168 140,889
Total revenue 370,737 305...
2013 2012
Cash Flows from Operating Activities:
Net Loss (779,369)$ (1,062,907)$
Adjustments to reconcile net loss to
cash...
March 31, December 31, December 31,
2013 2012 2011
(unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents 167,910$ 1,...
Earnings Model
Q1A Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
Revenue:
PCT products, services, other 221,569$ 235,000$ 320,...
IMPORTANT DISCLOSURES
This report has been prepared by Merriman Capital, Inc. (MCI), a wholly owned subsidiary of Merriman...
Merriman Capital has coordinated research coverage for Pressure BioSciences, Inc.. The research reflects the independent o...
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Pbio 8 8-2013

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  1. 1. MERRIMAN CAPITAL Pressure BioSciences, Inc. (PBIO) Spec Buy Initiating Coverage of PBIO with Spec Buy and $0.70 Price Target Paul Resnik (914) 423-5733 presnik@uncommonequities.com August 8, 2013 Stock Performance AUG-12 DEC-12 APR-13 AUG-13 0.5 0.4 0.3 0.2 0.1 Key Metrics Price: $0.24 Price Target: $0.70 52-Week Range: $0.15-$0.51 Cash (M): $0.2 Debt (M): $0.1 Net Cash/Share: $0.02 Book Value/Share: $(0.35) Investment Conclusion Pressure BioSciences, Inc. ("Pressure Bio") is focused on the development, marketing, and sale of proprietary laboratory instrumentation and associated consumables based on Pressure Cycling Technology (PCT). PCT is a patented, enabling technology platform with multiple applications in the estimated $6 billion life sciences sample preparation market. PCT uses cycles of hydrostatic pressure between ambient and ultra-high levels to control biomolecular interactions. Although sales progress has been gradual up until now, the Company has expanded the portfolio for PCT to encompass a diverse cross- section of biological applications, and it has now developed high throughput capabilities that should open up important new markets. We believe Pressure BioSciences is positioned to achieve accelerating sales growth. Accordingly, we are initiating coverage with a Speculative Buy rating and a 12-month price target of $0.70, almost three times the current market valuation. Market Data Market Cap (M): $2.7 Enterprise Value (M): $2.7 Shares Out (M): 11.5 Float (M): 9.9 30-Day Avg. Vol: 24,299.0 Merriman Estimates FY12A FY13E FY14E Sales (M) 1Q $0.3 $0.4A $0.4 2Q $0.3 $0.4 $0.6 3Q $0.4 $0.5 $0.8 4Q $0.2 $0.3 $1.1 FY (Dec) $1.2 $1.5 $2.8 EV/S 2.3x 1.8x 1.0x EPS 1Q $(0.14) $(0.11)A $(0.06) 2Q $(0.13) $(0.06) $(0.06) 3Q $(0.09) $(0.06) $(0.04) 4Q $(0.11) $(0.06) $(0.03) FY (Dec) $(0.43) $(0.29) $(0.17) Company Description Pressure BioSciences, Inc. engages in the development of pressure cycling technology (PCT) in the US. Its PCT technology uses instrumentation that cycles pressure between ambient and ultra-high levels at controlled temperatures and specific time intervals. Investment Summary Pressure Bio currently focuses its efforts on the development and sale of PCT- enhanced sample preparation systems (instruments and consumables) for forensics, biomarker discovery, bio-therapeutics characterization, vaccine development, soil and plant biology, histology, and counter-bioterror applications. • PCT has been proven to be a superior sample preparation technology, often enabling researchers to isolate proteins, lipids, and DNA that would otherwise elude them and reach valuable findings that would otherwise not been possible. However, the manual characteristic of the PCT process has prevented Pressure Bio's technology from making inroads in a large part of its potential market where subsequent steps are highly automated. • On May 30, 2013, the Company announced it had achieved and passed proof-of- principle objectives in their multi-year investment into the development of a high throughput (HT) system for their PCT platform. The Company believes the new HT design will allow their PCT platform to integrate with the automated, universally- accepted HT sample preparation and analytical system formats installed in tens of thousands of biological research laboratories worldwide. We believe that the HT system has the potential to significantly accelerate Pressure Bio's growth in existing and new PCT-based applications and products and its ability to attract and form new strategic partnerships. • To accomplish this, the Company will need to initiate a more effective marketing program and successfully raise additional capital as it moves towards profitability over the next two years. Importantly, Pressure Bio's small internal sales team has been buttressed over the past buttressed by the use of external distributors. This effort has been strengthened over the past year and a half by significant new distributorship agreements. We believe the Company's earnings have the potential to grow five-fold over the next two years. See page 13 for Risks and Valuation 600 California Street, 9th Floor, San Francisco, CA 94108 (415) 248-5600 Main • (415) 248-5690 Fax • (800) 909-7897 Trading www.merrimanco.com - twitter - OTCQX: MERR Member FINRA/SIPC PLEASE SEE IMPORTANT DISCLOSURES ON PAGE(S) 18 - 19 OF THIS REPORT
  2. 2. Company Description Pressure Bio, headquartered in South Easton, Massachusetts, is focused on solving the problems inherent in biological sample preparation, a crucial laboratory step necessary in virtually all biological life sciences research. The goal of sample preparation is to release biologically active entities (often proteins) from microbes, plant or animal cells, or cell walls from tissue or other matter. Pressure Bio's proprietary PCT technology can reproducibly control the sample preparation process using the unique properties of high hydrostatic pressure in alternating cycles of ambient and ultra-high levels (35,000 psi or greater). This process can safely, conveniently, and reproducibly control the actions of molecules in biological samples in a broad range of established and emerging life sciences areas, including: sample preparation for genomic, proteomic and small molecule studies; control of chemical (enzymatic) reactions; protein purification; pathogen inactivation; immunodiagnostics; DNA sequencing; and food safety. The PCT sample preparation system causes cell disruption, or lysis, when samples are subjected to these well-controlled, alternating cycles of ambient and ultra-high pressure in Pressure Bio's Barocycler® instruments. This use of rapid and repeated alternating cycles of hydrostatic pressure at pre-determined temperatures controls the interactions of bio-molecules and induces reproducible cell lysis for extraction of cellular components. Current protocols for other methods of sample preparation are typically complex and time-consuming, and do not guaranty reproducible results from one batch of samples to the next. PCT offers a number of advantages over current methods of sample preparation including: hand-grinding with mortar and pestle; mechanical mincing; sonication; homogenization; bead-beating; and enzymatic digestion. Pressure Bio holds 14 United States and 10 foreign patents covering multiple applications of PCT in the life sciences field, including sample preparation for genomic, proteomic, and small molecule studies; pathogen inactivation; protein purification; control of chemical (particularly enzymatic) reactions; and immunodiagnostics (clinical laboratory testing). Corporate History Pressure Bio was initially formed as Boston Biomedica (BBII) in 1978 by CEO Richard T. Schumacher while he worked as a researcher for Harvard Medical School. Mr. Schumacher left the Harvard Medical area in 1985, subsequently grew BBII to over 300 employees and 600 products, and took BBII public in 1996. In September 2004, following a decision to focus on pressure cycling technology, all other BBII operations were sold, including the very successful and important quality-control products used to monitor, measure, and ensure the performance of HIV, viral hepatitis, and other infectious disease test kits used by hospitals and blood banks worldwide. At that time, the Company changed its name to Pressure BioSciences, Inc. The Company began significant operations as Pressure Bio in February 2005 and has been focusing its research, development, and commercialization efforts on sample preparation for genomic, proteomic, and small molecule studies since that time. Products Since Pressure Bio began commercial operations in mid-2007, it has released a number of PCT-based products to the life sciences market, including three pressure generating instruments (Barocyclers) that can be used in conjunction with consumables designed by the Company. Barocycler instrumentation, which is CE registered and ETL certified, allows the Company to market these instruments in Europe and in multiple countries throughout the world. Consumables include single-use processing containers (PULSE Tubes and MicroTubes), kits that include application-specific reagents and consumables, and several ready-to-use, established application-specific protocols. Many of these products and protocols are covered by claims in the Company’s 24 patents in the United States, Canada, Europe, Australia, and Japan. PCT Equipment Barocycler® NEP3229 The Barocycler NEP3229 is a self-contained, high-pressure laboratory instrument generating up to 35,000 psi designed to fit on a bench top, inside a biological safety cabinet, or on the shelf of a cold room. The Barocycler NEP3229 is capable of processing up to three samples simultaneously using specially designed, single-use containers called PULSE (Pressure Used to Lyse Samples for Extraction) Tubes. PULSE Tubes transmit the power of PCT from the Barocycler instrument to the sample. This Barocycler has an external chiller hook-up, automatic fill and dispense valves, and an integrated micro-processor with an easy-to-use keypad. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 2
  3. 3. Figure 1. Barocycler NEP3229 Source: Pressure BioSciences, Inc. Barocycler® NEP2320 The compact and versatile Barocycler NEP2320, which is smaller than the NEP3229, is a versatile sample preparation instrument designed to use a minimum amount of laboratory bench space. The NEP2320 uses available laboratory compressed air, bottled compressed air, or a stand-alone compressor to create high and ultra-high hydrostatic pressure inside the Barocycler reaction chamber. Control of the PCT process is accomplished by specialized components, a programmable controller, and software. The NEP2320 quickly and efficiently processes one sample at a time, while providing the user with many of the features of the Barocycler NEP3229, including temperature control. The Barocycler NEP2320 uses the same PULSE Tubes as the Barocycler NEP3229. The PULSE Tube is placed in the reaction chamber of the Barocycler NEP2320, submerging it in the distilled water-containing chamber, which is then pressurized to the desired level. Figure 2. Barocycler NEP2320 Source: Pressure BioSciences, Inc. Barocycler® HUB440 High Pressure Generator The Barocycler HUB440 is capable of creating and controlling hydrostatic pressure between 500 to 58,000 psi. The Barocycler HUB440 is the first portable, ready to use pressure generator for the laboratory bench. As the name "HUB" implies, this pressure generator is designed to be used with multiple accessories including, importantly, a computerized control system. Its modular configuration provides needed flexibility as the external tube chamber can be built for any size. In its expected future format for beta testing (planned for late 2013), the Barocycler HUB440 is expected to operate with a multiwell format of three strips of eight samples, or 24 samples simultaneously. In addition to the higher psi capability, the HUB440 can move between different pressures without the need to return to normal ambient) pressure. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 3
  4. 4. Figure 3. Barocycler HUB440 Source: Pressure BioSciences, Inc. The PCT Shredder Systems Pressure Bio's Shredder Systems are low shear mechanical devices for gentle, rapid and safe disruption of tissues and organisms. Both the PCT Shredder and the Shredder SG3 can provide effective extraction of DNA, RNA, proteins, mitochondria, lipids and small molecules from tissues and organisms when used with Shredder Tubes and a choice of buffers. Both systems use a variety of Shredder Tubes to directly and rapidly grind solid samples into small pieces, providing easy handling and reducing sample contamination. Although extraction efficiency and protein recovery can be increased if this process is combined with pressure cycling technology, Shredder systems can be used independently of PCT. Of the roughly 100 Shredders thus far sold, about half were not sold in conjunction with a Barocycler. The PCT Shredder requires a single-use Shredder PULSE Tube. This pre-processing method increases sample surface area and, when followed by PCT extraction, permits better access of high-pressure extraction fluid to the sample. Using the PCT Shredder with samples such as fibrous muscle tissue, plant cell walls, insect exoskeletons and the cuticle of nematodes rapidly produces excellent yields of high quality nucleic acids, proteins, lipids, and small molecules. Shredder PULSE Tubes can then be processed directly in a Barocycler. The Shredder SG3 features a three position force setting lever (FSL). Otherwise it is similar in function to the PCT Shredder. The FSL enables the operator to select and apply different levels of reproducible force to the sample during the shredding process, while eliminating the need for the operator to exert force for long periods when processing one or more samples. Shredder Tubes are available with or without a metal insert to disrupt tough structures such as fibrous muscle tissue, plants, arthropod exoskeletons or the cuticle of nematodes. Both configurations are available as PCT Shredder PULSE Tubes for use with high pressure processing, or as Shredder Tubes for use only at ambient (non-PCT) conditions. Shredder SG3 and Shredder Tubes are compatible with a wide variety of sample preparation kits and reagents as well as kits sold by the Company for specialized sample preparation applications to rapidly achieve excellent yields of high quality nucleic acids, proteins, lipids, organelles and small molecules. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 4
  5. 5. Figure 4. The PCT Shredder Figure 5. The SG3 Shredder Figure 6. Shredder Tubes Source: Pressure BioSciences, Inc. PCT MicroTube Adapter Kit The PCT MicroTube Adapter Kit, in combination with a PCT Barocycler, can reliably, efficiently, and reproducibly control enzymatic digestion of proteins for preparation for mass spectrometry and other laboratory instrumentation. The PCT MicroTube Adapter Kit comes complete with an ergonomically designed, space-saving workstation, PCT MircroTubes and MicroCaps, as well as tools and hardware to enable the user to process from one to 48 samples in PCT MicroTubes simultaneously in the Barocycler 3229. Figure 7. PCT MicroTube Adapter Kit Source: Pressure BioSciences, Inc. Consumables FT500 PULSE Tubes PULSE Tubes transmit the power of PCT from the Barocycler instruments to the sample. Specimens are placed on the lysis disk of the FT500. Using a PULSE Tube Tool, the FT500 is assembled with a ram, selected sample processing buffer is added, and the Tube is closed with a screw cap. The FT500 is placed in the pressure chamber of the Barocycler, chamber fluid is added, and pressurization begins. As pressure is increased, the ram pushes the sample from the sample chamber through the lysis disk and into the fluid retention chamber. When pressure is released, the sample (now partially homogenized) is pulled back through the lysis disk by the receding ram. The combination of physical passage through the lysis disk, rapid pressure changes, chemistry and biophysical mechanisms breaks up the cellular structures releasing nucleic acids, small molecules, and proteins. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 5
  6. 6. Figure 8. FT500 PULSE Tubes Source: Pressure BioSciences Inc. FT500-ND PULSE Tubes Unlike the FT500 PULSE Tube, the FT500-ND does not have a lysis disk. It was designed for processing solutions, suspensions, or complex matrices - such as soil - that do not require passage through a lysis disk for partial homogenization. Since there is no lysis disk, greater variation in both sample amount and processing buffer volume is possible than with the FT500. Like the FT500, the FT500-ND transmits the power of PCT from the Barocycler instrument to the sample. The assembled FT500-ND is placed in the pressure chamber of the Barocycler, PCT conditions are selected, and pressure cycling begins. During the PCT process, the ram compresses the sample and processing buffer against the inside of the cap, resulting in pressure being transmitted to the sample. When one PCT cycle has finished, the ram partially retracts, as pressure is released. This process is repeated for the requisite number of pressure cycles for a particular application. Together with the combination of rapid pressure changes, chemistry, and biophysical mechanisms, this diskless PULSE Tube is ideal for processing bacteria, complex matrices, extracting mitochondria from cells, or for accelerating trypsin digestion and other enzymatic reactions under pressure. PCT MicroTubes and PCT MicroCaps The PCT MicroTube, designed to meet the critical requirements of modern proteomic analysis by mass spectrometry, is made from an inert polymer, which exhibits outstanding chemical resistance, a non-wetting surface, and negligible protein and nucleic acid adsorption. These properties help to ensure nearly complete sample recovery, vital for high pressure-enhanced enzymatic proteolysis. PCT MicroCaps also meet the critical requirements of modern proteomic analysis by mass spectrometry and are available for three difference reaction volumes: 50, 100, or 150 microliters. PCT MicroCaps can also be used as gel spot pickers to excise and transport small protein spots from a gel to a PCT MicroTube. Figure 9. PCT MicroTubes and PCT MicroCaps Source: Pressure BioSciences, Inc. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 6
  7. 7. ProteoSolve-TD Kits Pressure-enhanced kits specially designed for the extraction and solubilization of integral membrane proteins from cell cultures and soft tissues, including blood cells (ProteoSolve-TD1) and recalcitrant tissues and solid tumors (ProteoSolve-TD2) using solvent-free buffer systems. It is estimated that nearly 80% of all new biological drugs are directed against these integral membrane proteins. ProteoSolve-SB (Systems Biology) Systems Biology is the characterization and understanding of disease states by quantifying and analyzing proteins, lipids, nucleic acids and their interactions. Systems Biology incorporates proteomics, lipidomics, genomics and transcriptomics and is essential in the development and evaluation of drug therapies. Samples used in these studies are often limited and extremely valuable. Therefore, analytes such as proteins, lipids and nucleic acids, must be efficiently extracted from such samples so that as much information as possible is obtained. To meet the growing need for a method to extract multiple, diverse analytes from the same sample, ProteoSolve-SB was developed for the simultaneous extraction of proteins, lipids, DNA and RNA from cells or tissues in a single PULSE Tube. ProteoSolve CE-Native and CE-Stringent Kits Extraction of protein from C. elegans using the PCT Shredder and ProteoSolve-CE Native or ProteoSolve-CE Stringent Kits from PBI results in greater yield of protein than extraction with mortar and pestle with liquid nitrogen. PBI’s ProteoSolve-CE Native Kit was developed for the efficient recovery of native proteins and protein complexes under minimally denaturing conditions in which native conformation and activity are preserved. The ProteoSolve-CE Native Plus Reagent is designed to preserve the native conformation of proteins and their activity, while preventing aggregation and the loss of hydrophobic proteins. Moreover, the reagent design may facilitate the refolding of some denatured proteins, in many cases partially restoring their activity. The ProteoSolve-CE Stringent Kit includes ProteoSolve-CE Stringent Lysis Reagent, ProteoSolve-CE ion exchange Resin, ProteoSolve- CE Reducing Reagent, CE SiC Abrasive and Shredder PULSE Tubes. ProteoSolve-CE Stringent Lysis Reagent is a “high stringency” urea- based reagent that uses a proprietary detergent and a reducing agent to maximize protein yields from cells and tissues. This kit was designed for use in conjunction with a PBI Shredder. Even higher protein yields may be obtained when sample processing includes an optional, subsequent PCT step in a PBI NEP3229 or NEP2320 Barocycler. Mitochondria Isolation Kit: Rat Muscle This kit uses a semi-automated method to generate a mitochondria-enriched preparation using the PCT Shredder of the Shredder SG3 for tissue homogenization. The rapid mechanical homogenization with either shredder can be paired with an optional PCT step to further increase yield. Mitochondria prepared from freshly harvested tissue using this kit are intact, normal and functional, as assessed by Western blotting, electron microscopy, Ca 2+ uptake and respiration assays. Mitochondria Isolation Kit: Rat Lung This kit uses a semi-automated method to generate a mitochondria enriched preparation using the PCT Shredder of the Shredder SG3 for tissue homogenization. The rapid mechanical homogenization with either shredder is followed by PCT. Mitochondria prepared from freshly harvested or frozen tissue using this kit are intact and ideal for proteomic studies. ProteoSolve-IEF Reagent ProteoSolve-IEF is designed to solubilize many types of proteins during sample preparation for several analytical techniques, including isoelectric focusing and gel- or solution-phase protein fractionation. This reagent contains powerful chaotropic agents and a zwitter- ionic detergent. Product Supply Source Scientific, LLC has been the Company’s sole contract manufacturer for its Barocyclers. This relationship has afforded Pressure Bio with a reliable stream of instruments at an acceptable cost. PULSE tubes are supplied by a local plastics molding manufacturer. Pressure Bio produces its own PCT Shredders and MicroTube Adapter Kits. Sources of Revenue Pressure Bio derives its revenue from the sale or lease of its Barocycler and Shredder instruments, replacement of instrument parts as necessary, and from the recurring purchase of consumables required for the PCT process, including single-use processing containers (PULSE Tubes and MicroTubes) and reagent kits. The Company also offers extended service contracts to purchasers of Barocycler instruments. These service contracts (at a cost of 10% of the purchase price of an instrument per year) provide on-site scheduled preventative maintenance, on-site repair or replacement of all worn or defective component parts, and telephone support at no incremental cost for the life of the service contract. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 7
  8. 8. The Company also receives federal agency grants, including National Institutes of Health (NIH) Small Business Innovation Research SBIR Phase I and II Grants. These grants support projects to establish the technical merit and feasibility of research and development ideas that may ultimately lead to commercial products or services, and in the case of Pressure Bio, they provide funding for work the Company performs as part of the development of its PCT technology to support commercialization efforts. With regard to grants, since funds are received as an offset to laboratory expenses incurred in development of novel applications for PCT, they directly add to profitability as they cover expenses that would normally need to be paid by the Company’s operations; they also enable the Company to expand the potential market for PCT. Pressure BioSciences’ current customers include such government agencies as the Food and Drug Administration (FDA), National Institutes of Health (NIH), Centers for Disease Control and Prevention (CDC), and the US Department of Agriculture (USDA). Academic customers include Harvard Medical School, Stanford University, and the University of California at Los Angeles (UCLA). In addition, Pressure Bio has diagnostic, biotechnology, and pharmaceutical customers, including Amgen, Biogen Idec, Bristol-Myers Squibb, Eli Lilly and Merck. Market Size Pressure Bio estimates that the market for the routine preparation of biological samples prior to testing and analysis is comprised of up to 80,000 laboratories and 500,000 researchers worldwide that currently require the extraction of DNA, RNA, proteins, lipids, and small molecules for their research studies. Strategic Directions International, a well-regarded provider of market intelligence, has estimated that the global sample preparation market is in the area of $6 billion. The Company’s primary efforts are currently focused on the development and sale of PCT-based products and applications for mass spectrometry, a powerful laboratory tool that is playing an increasingly important role in the analysis of biological samples in life sciences research. Strategic Directions International has estimated the current mass spectrometry global market at over $3.0 billion; Pressure Bio believes that PCT offers significant advantages in speed and quality compared to current techniques used for protein digestion required as a precursor to mass spectrometry analysis. Other strategic areas in biological sample preparation where Pressure Bio has seen encouraging market penetration of PCT and its PCT-based products are in PCT-enhanced enzymatic digestion applications outside of the mass spectrometry area include forensics, biomarker discovery, soil and plant biology, histology, and counter-bioterror applications. Marketing/Sales Effort Pressure Bio's small internal sales effort team of one full-time and one part-time employee is buttressed by the use of external distributors. This effort has been strengthened over the past year and a half by significant new distributorship agreements. We have listed four below: November 26, 2012: Pressure Bio and Constant Systems Ltd (CS) announced they had entered into a two-way, strategic marketing, selling, and distribution agreement. Under the terms of the agreement, Pressure Bio has been awarded non-exclusive rights to market, sell, and distribute CS’s unique, high pressure cell disruption equipment and consumables in the United States, Canada, and Mexico. Concomitantly, CS has been awarded the rights to market, sell, and distribute PBI’s patented pressure cycling technology based instruments and consumables in England, Scotland, Wales, Ireland, Spain, Portugal, Italy, Norway, Sweden, Finland, Denmark, and Singapore. CS currently has strong sales and distribution channels in all twelve of these countries; PBI, on the other hand, had none. While both the CS and Pressure Bio technologies are based on high pressure, each product line has fundamental scientific capabilities that the other does not have. Pressure Bio's PCT Platform uses patented pressure mechanisms to achieve small-scale, molecular level effects. CS’s technology uses different, proprietary pressure mechanisms for larger-scale, non-molecular level processing. In a number of routine laboratory applications, such as protein extraction, both effects can be critical to success. The agreement is in effect until December 31, 2013; however, PBI and CS expect to extend the agreement prior to its termination. October 29, 2012: Cole-Parmer, a leading global source of laboratory and industrial fluid handling products, instrumentation, equipment, and supplies since 1955 (based in Illinois), began marketing the Pressure Bio Shredder SG3. Cole-Palmer is a business unit of Thermo- Fisher Scientific, a world leader in analytical instruments and consumables with $13 billion in sales. July 12, 2012: Pressure Bio has distribution agreements with three companies having combined sales coverage in six new countries. For China, the Company entered into an exclusive distribution agreement with the Yinzhou Police Equipment & Technology Co., Ltd. (Guangzhou, China) for its PCT product line and a non-exclusive agreement for its patent-pending, mechanical homogenization device, the Shredder SG3, and associated consumables. This Agreement allows Yinzhou to market and sell PBI products into the forensics marketplace only. For Vietnam, Cambodia, and Laos, the Company entered into an exclusive distribution agreement with BMN MSI., Ltd. (Hanoi, Vietnam) for its PCT product line and a non-exclusive agreement for the Shredder SG3 homogenization device and associated consumables. For Australia and New Zealand, the Company entered into an exclusive distribution agreement with iScience Technology Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 8
  9. 9. (Melbourne, Australia) for its PCT product line, and a non-exclusive agreement for the Shredder SG3 homogenization device and associated consumables. March 1, 2012: Pressure Bio announced that it has entered into a distribution agreement with Netherlands-based life sciences company LA Biosystems BV. Under the terms of the agreement, LABio has the exclusive right to market and sell PCT and consumables in Belgium, the Netherlands, and Luxembourg. In addition, LABio was given the non-exclusive right to market and sell The Shredder SG3, and its associated consumables, in the same three countries. Pressure Bio believes that LABio is one of the top life sciences distributors covering the Benelux region. LABio works closely with IUL Instruments, GmbH, a leading life sciences distributor based in Germany. PBI announced a partnership with IUL in December 2011 in which IUL became the exclusive distributor for PBI’s PCT product line for Germany and Switzerland. Recent Developments On May 30, 2013, the Company announced it had achieved proof-of-principle objectives in their multi-year investment into the development of a high throughput (HT) system for their PCT platform. The Company believes the new HT design will allow their PCT platform to integrate with the automated, universally-accepted HT sample preparation and analytical system formats installed in tens of thousands of biological research laboratories worldwide. Pressure Bio believes that many of the estimated 80,000 research laboratories working with biological samples worldwide use automated, HT sample preparation and analytical systems in their studies. HT systems generally use sample handling robotics and "multiwell" test plates in standardized formats (e.g., 24, 96, or 384 wells per plate in strips of 8) for processing and testing large numbers of samples simultaneously. The multiwell plate is often processed in an automated fashion, allowing scientists to perform other important tasks while samples are being processed unattended. Although a number of studies have shown significant advantages of the PCT platform in preparing biomolecules (e.g., DNA, proteins, and lipids) for analysis, the PCT platform continues to be used primarily in small but important research studies. Unlike today's popular HT multiwell plates that use an automated, unattended approach, the PCT Platform uses individual test tubes that require a lot of manual sample handling. Pressure Bio believes these manual sample handling requirements have prevented the PCT platform from being better accepted by the research community. To that end, the Company also believes that its new HT multiwell format will substantially enhance and accelerate the acceptance of the PCT platform in the life sciences R&D marketplace. Because the existing multiwell plates could not withstand the high pressures and temperatures demanded by the PCT process, it was necessary for Pressure Bio to develop specially-designed multiwell plates; the pressure system of the PCT platform had to be redesigned as well. Pressure Bio is planning first generation HT PCT platform applications for enhanced enzymatic digestion, deglycosylation (a quality control process required in drug development and manufacturing), and lipid profiling. The Company expects beta units to be built and tested by the end of 2013, and market-ready units to be available for sale in the first or second quarter of 2014. Pressure Bio believes that the new HT multiwell PCT platform has the potential to significantly accelerate growth in existing and new PCT applications and products, sales reach, installed base, strategic partnerships, and overall revenue stream going forward. The Company has stated that "this technology breakthrough is a game-changer." Other developments that have occurred during 2013 include: On April 4, 2013 Pressure Bio announced that further advances had been made in the development of an improved method for rape kit sample testing using the Company's PCT platform by Dr. Bruce McCord and his team at the International Forensic Research Institute of Florida International University. With the crime of rape, a victim's body is part of the crime scene. A rape kit (as known as a sexual assault evidence kit) is the collection of DNA evidence from a rape victim's body. If the victim decides to report the crime to the police, the rape kit is booked into police evidence. Not every one of these booked rape kits will get tested and they become part of what is referred to as the rape kit backlog—untested rape kits in both police storage and crime lab facilities. In a minority of law enforcement jurisdictions in the United States, notably New York City, Los Angeles, and the state of Illinois, policy or law requires that every rape kit booked into police evidence is sent to the crime laboratory and tested. The vast majority of law enforcement jurisdictions do not require that every rape kit be tested. Experts in the federal government estimate that there are hundreds of thousands of untested rape kits in police and crime lab storage facilities throughout the United States. Pressure Bio believes that better rape kit testing methods will reduce this backlog significantly. On March 19, the Company announced that the use and advantages of its PCT Platform had been highlighted in cancer, stem cell, and heart disease studies at an important protein research conference by researchers from the FDA, Johns Hopkins University, and ETH Zurich. Pressure Bio believes that the FDA data indicate that PCT can be used to extract proteins from stem cells with consistency and quality; the Johns Hopkins data indicate that combining PCT with heat might be a way to recover significantly more proteins from FFPE (biopsy) tissues compared to standard (heat) methods, especially membrane proteins (this could be very important with scientists looking for disease biomarkers); and the ETH Zurich data might be significant for extracting proteins from small, needle biopsy samples, something that the Company believes is vitally needed today yet not well satisfied at the present time, and (they believe) a significant market opportunity. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 9
  10. 10. On February 12, Pressure Bio announced that Dr. Mickey Urdea had been appointed to its Board of Directors. Dr. Urdea is a well- known entrepreneur and leader in the biotechnology field, having founded two successful companies (Halteres Associates and Tethys Bioscience) over the past ten years. Earlier in his career, Dr. Urdea led the infectious diseases R&D groups at Chiron Corporation and Bayer Diagnostics. He has also been on the Scientific Advisory Boards of numerous life sciences companies and was a member of the Bill and Melinda Gates Foundation Diagnostic Forum. First Quarter Results Pressure Bio recognized revenue of $370,737 for the March 2013 quarter as compared to $305,661 during the year-earlier period, an increase of $65,076 or 21%. Most of this revenue gain was derived from the sale of PCT products and services, which was $221,569 for the first quarter, up from $164,772 during the March 2012 period. In turn, most of this increase came from sale of PCT Instruments and PCT Shredder Kits, which totaled $135,939, up from $94,842 during the same period in the prior year, an increase of approximately 43%. In the March 2013 quarter, Pressure Bio recorded $149,168 of grant revenue compared to $140,889 in the year-earlier quarter. In February 2013, The Company began to work on a Phase I grant received from the National Institutes of Health NIH) to help fund the development of a high pressure-based system to improve the extraction of DNA for next generation sequencing platforms. Pressure Bio also continued to work on a Phase II grant received in October 2011 from the Department of Defense to fund the development of a PCT-based system to improve the processing of pathogenic organisms. The cost of PCT products and services was $104,544 for the March 2013 quarter compared to $78,194 for the comparable period in 2012. Gross margins were 53% for both periods. It should be noted that Pressure Bio sold a partially depreciated machine in 2012 which contributed to the gross margin in that period. Research and development expenditures were $246,458, down slightly from $271,611, due to a reduction in spending for outside services and employee-related expenses. Selling and marketing expenses decreased to $193,900 for the March 2013 quarter from $238,092 for the comparable period in 2012. This decrease was primarily due to a smaller employee headcount partially offset by an increase in tradeshow and travel related expenses. General and administrative costs totaled $550,859 for the March 2013 quarter as compared to $682,346 for the comparable period in 2012. In the prior year period, Pressure Bio incurred increased audit fees relating to accounting matters and legal fees in connection with amendments to its Registration Statement on Form S-1. The Form S-1 was subsequently withdrawn. The Company also incurred higher investor relations costs in the prior year. Pressure Bio's operating loss was $725,024 for the quarter as compared to $964,582 for the comparable period in the March 2012 period, reflecting the higher revenues and lower operating expenses described above. Interest expense totaled $8,902 for the quarter as compared to interest expense of $56,313 in the first quarter of 2012. In the prior year period, Pressure Bio amortized approximately $46,000 of imputed interest against the debt discount relating to warrants issued with convertible debt which was subsequently repaid or converted to Company stock. In the March 2013 quarter, the Company recorded a non-cash charge of $45,445 which reflected the increase in the fair value of the warrant liability related to warrants issued in its Series D private placement as the Company's common stock rose during the period. In sum, Pressure Bio recorded a net loss to common shareholders of $1,394,090 or $(0.11) per share, as compared to a net loss to common shareholders of $1,087,321 or $(0.14) per share in the year-earlier period. Liquidity and Financial Condition As of March 31, 2013, Pressure Bio did not have adequate working capital resources to satisfy its current liabilities. The proceeds from equity financing described below enabled the Company to extend its cash resources to fund normal operations until the end of May 2013. Net cash used in operations for the three months ended March 31, 2013 was $617,494 as compared to $584,737 for the year-earlier period. The increase in cash used in operations in 2013 as compared to 2012 was principally due to a decrease in the accounts payable balance of $140,510 in the period ending March 31, 2013 as compared to an increase in accounts payable in the prior year period. Cash used in investing activities for the three months ended March 31, 2013 and 2012 was not significant. Net cash provided by financing activities in the March 2013 quarter was $785,477 as compared to $377,454 for the same period in the prior year. The cash from financing activities in the 2013 period included $155,000 from convertible debt and $721,595 in proceeds, net of $24,405 in legal fees, from the first two rounds of its Series J Convertible Preferred Stock offering. Subsequent to the end of the March 2013 quarter, Pressure Bio consummated the following fundings: On April 10, the Company entered into a six-month, uncollateralized loan agreement for a principal sum of $275,000, of which $125,000 was advanced to the Company upon closing. This note includes an original issue discount of 10%, and an interest rate of 12%, but no interest will be due if the note is repaid on or before July 9, 2013. On April 12, 1,000,000 shares of the Company’s Common Stock were converted into 10,000 shares of Series H Convertible Preferred Stock. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 10
  11. 11. On April 18, Pressure Bio issued 200,000 shares of restricted Common Stock to a newly retained investor relations firm for payment of services until October 2013, and 100,000 shares of restricted Common Stock to a previously retained investor relations firm for payment of services until September 2013. On June 14, Pressure Bio announced that it had closed the third and final tranche of its Series J private placement of convertible preferred stock and warrants, raising $175,100. Combined with two earlier tranche closings ($1,702,800 on February 6 and $156,900 on March 28, 2013), the Company has closed a total of $2,034,800 in its Series J private placement, slightly over its goal of $2.0 million. The investors in the Series J private placement included all members of the Company's Board of Directors, plus new and existing accredited investors in Pressure Bio. The transaction consisted of the sale of 5,087 units of Series J preferred stock and warrants to purchase the Company's common stock. The price per unit was $400.00. Each unit consisted of one share of Series J preferred stock (convertible into 1,000 shares of common stock at a common stock equivalent price of $0.40 per share) and a warrant to purchase 1,000 shares of restricted common stock. The warrants are exercisable for a period of three years from the applicable closing date, at an exercise price equal to $0.40 per share. Of the $2,034,800 amount, $921,100 was in cash and $1,113,700 was from the conversion of debt. The Company also announced the closing of a $500,000, one-year, convertible debenture with an institutional investor on Friday, June 7, 2013. Interest on the note is 10%. Under the terms of the note, the Company received $250,000 at the initial closing, and was to receive an additional $100,000 on or before July 7, 2013 and the final $150,000 on or before August 6, 2013. The investor has the right to convert the note into common stock of the Company at any time six months after each closing date. Pressure Bio has the right to pre-pay the note at any time. In the June 14 press release announcing these financing, Richard Schumacher, President and CEO of Pressure Bio, stated that the Company's next goal was to "greatly strengthen" its cash position "before year-end." Financial Outlook We believe Pressure Bio will be able to grow revenue this year as sales of the PCT Shredder Systems and the new Barocycler HUB440 build on the core revenue stream; our full year 2013 product revenue estimate of $1.02 million represents a 26% gain over 2012. Grant revenues which are used to offset research and development spending but also include allowances for overhead are difficult to predict. Based on first quarter grant revenues and ongoing recognition of grant payments through September 2013 from a contract of approximately $850,000 from the Department of Defense awarded in October 2012 to help fund the development of a PCT-based system to improve the processing of pathogenic organisms, specifically viruses and bacteria, we estimate full year 2013 grant income at approximately $500,000, up from about $430,000 in 2012. Assuming a 52% gross margin on product sales, about $450,000 in R&D expense above grant income, a 15% increase in selling and marketing expense, and a 13% reduction in general and administrative expense which largely reflects the absence of $263,000 2012 costs related to an uncompleted public offering of stock, we project a 2013 operating loss of $3.00 million, down from $3.46 million in 2012. With regard to non-operating figures, we anticipate interest expense will be about half of the 2012 level as about $1 million in loans were converted to Series J convertible preferred shares in February 2013. The Company reported a $45,445 non-cash charge from the change in fair value of warrant liability in the first quarter; we do not attempt to estimate future charges or credits from this source. Also in the first quarter, Pressure Bio reported a non-cash deemed dividend of $532,548 ascribed to its Series J preferred stock. Not including this entry, we estimate the Company will record preferred dividends of about $118,000 in 2013. Our shares outstanding estimates include the conversion of the Series G preferred stock in July. In sum, we are estimating a per share loss of $0.29 for 2013 as compared to a $0.43 loss in 2012. In our opinion, the "real" story unfolds in 2014 as the Company rolls out its high throughput system for its PCT platform. First shipments are expected in either late in the first quarter or early second quarter. Management believes, and we find it reasonable, that the high throughput capability will dramatically expand the market for its products. Our 2014 estimates depict rapidly growing revenues and gradually improving margins. We project a more-than-doubling in sales to $2.1 million and look for the loss from operations to shrink to $2.6 million ($0.17 per share reflecting the Series J preferred stock conversion mid-year). In 2015, with sales acceleration compounded by the growing use of consumables reflecting high throughput uses, we estimate product revenues will grow to $7.6 million and that the Company will turn profitable in the second half and report an operating profit of $346,000 for the year ($168,000 after interest expense). Although our share outstanding estimates include more than just preferred conversions, we have not estimated the size or nature of the funding that the Company hopes to achieve before year end. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 11
  12. 12. Management Richard T. Schumacher Founder President and CEO Mr. Schumacher, the founder of Pressure BioSciences, has served as a director of the Company since the formation of its legacy business, Boston Biomedica, Inc. in 1978, and has served as CEO and President since the formation of Pressure Bio in 2004. He previously served as President, CEO and Chairman of Boston Biomedica. Prior to that time Mr. Schumacher served as the Director of Infectious Disease Services for Clinical Sciences Laboratory, a medical reference laboratory, and was employed by the Center for Blood Research, a nonprofit medical research institute associated with Harvard Medical School. Mr. Schumacher was a co-founder of Panacos Pharmaceuticals (NASDAQ: PANC) and a member of the founding group of Trinity Biotech (NASDAQ: TRIB). Mr. Schumacher received a BS in Zoology from the University of New Hampshire. Edmund Ting, Sc.D. Senior VP, Engineering Dr. Ting joined Pressure BioSciences as Senior Vice President of Engineering in April 2006. Prior to joining the Company, Dr. Ting served as the Chief Research Officer of Avure Technologies, a worldwide manufacturer of high-pressure hydrostatic processing equipment for the food and materials processing industry and VP of Engineering Research and Development at Flow International, a world leader in the ultrahigh pressure waterjet cutting technology market. Dr. Ting earned a Bachelor of Science degree in mechanical engineering from Northeastern University and a Science Doctorate in materials science and engineering from the Massachusetts Institute of Technology. Nathan P. Lawrence, Ph.D. VP, Marketing and Business Development Dr. Lawrence joined Pressure BioSciences Inc. in 2005, serving as Director of Research and Development, and is responsible for the development of many of the early applications based on Pressure Cycling Technology. Dr. Lawrence was later promoted to Vice President of Marketing, Sales, and Business Development. Prior to joining Pressure BioSciences, Dr. Lawrence worked for 454 Life Sciences in product development. Prior to 454 Life Sciences, Dr. Lawrence was Director of Research and Development for Boston Biomedica, where he was responsible for the development of PCT and nucleic acid-based diagnostic assays. Dr. Lawrence holds a BA from the University of Miami, an M.S. from Southern Connecticut State University, and a Ph.D. from Yale University. Alexander Lazarev, Ph.D. VP, Research and Development Dr. Lazarev joined Pressure BioSciences in 2006 as Director of Research and Development and was promoted to Vice President of Research and Development in 2007. Prior to joining Pressure BioSciences, Dr. Lazarev was a Visiting Scientist at the Barnett Institute of Chemical and Biological Analysis at Northeastern University and served as a Director of New Technology Development at Proteome Systems Inc., where he was involved in the research and development of innovative proteomic analysis applications. Dr. Lazarev previously held senior research positions at Genomic Solutions Inc. and PhytoChem Technologies Inc. Most of Dr. Lazarev’s scientific career has involved the development of methods and applications for biochemical analysis. Dr. Lazarev has been elected as an Executive Board member of the MASSEP.org, a non-profit scientific discussion forum dedicated to the promotion and improvement of chromatography and other analytical technologies. Dr. Lazarev holds undergraduate and graduate degrees from the University of Kazan, Russian Federation. Conrad Mir Chief Financial Officer Mr. Mir has over twenty years experience in investment banking, financial structuring, and corporate reengineering. He has served in various executive management roles and on the Board of Directors of several companies in the biotechnology industry. Most recently, Mr. Mir was chairman and CEO of Genetic Immunity, Inc., a plasmid, DNA company in the HIV space. Prior to that time, Mr. Mir served as executive director of Advaxis, Inc., a vaccine company. During his tenure at Genetic Immunity and Advaxis, Mr. Mir was responsible for raising nearly $40 million in growth capital and broadening corporate reach to new investors and current shareholders. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 12
  13. 13. Valuation and Conclusion Although sales progress has been gradual up until now, the Company has expanded the portfolio for Pressure Cycling Technology to encompass a diverse cross-section of biological applications, and it has now developed high throughput capabilities that should open up important new markets. We believe Pressure BioSciences is positioned to achieve accelerating sales growth. To accomplish this, the Company will need to initiate a more effective marketing program and successfully raise additional capital as it moves towards profitability over the next two years. We believe a valuation based on the level of sales is appropriate. Medical laboratories and research companies (albeit much larger enterprises) trade at an average multiple to sales of 2.65. Examples include Thermo-Fisher (TMO, $91.68, NR: 2.59x); Danaher (DHR, $67.49, NR:2.51x); and Agilent (A, $46.28, NR:2.29x). Valuing Pressure Bio at 2.5 times projected 2015 total revenue of $8.2 million, assuming 19.2 million shares outstanding (up from 12.1 million at the end of the first quarter of 2013), and discounting that value at an annual rate of 30% (which should allow for additional dilution), we generate a 12-month price target of approximately $0.70 per share. Risks That May Impede Achievement Of Our Price Target Financial Pressure Bio has historically funded its operations almost on a pay-as -you-go basis. Although this has helped mitigate dilution during a period when management believed the price of the shares did not reflect the Company's potential, it has resulted in a company that has limited financial resources. Going forward, in the Chairman's own words, the Company's next funding goal is to "greatly strengthen" its cash position "before year-end." Achieving that goal will likely cause significant dilution; not achieving that goal will make it difficult for the Company to achieve its growth objectives. Execution In the next year, Pressure Bio will need to bring its high throughput to commercialization and strengthen its marketing effort in order achieve the long-term growth we envision for the Company. Failure to create and successfully manufacture this product or to effectively market it would be a major setback for the Company. We believe the Company has made strides since the beginning of 2012 in strengthening its distribution capabilities that enhance its likelihood of success. Product Acceptance For several years, Pressure Bio has been a company with a superior product but limited sales. The Company's product development and sales effort could be characterized as a "long beta test," but the time has come to prove that there is a large market for its sample preparation instruments. As is the case for any new platform, sales are the test of product acceptance. The Company believes the high throughput capability represents the final piece in the puzzle to achieving broad product acceptance. Senior Management The acknowledgement that a Company's success depends on the continued service of senior management is almost a "boiler plate" risk in any SEC filing, and Pressure Bio's filings note that its "failure to retain existing engineering, research and development and sales personnel could harm...product development capabilities and customer and employee relationships, delay the growth of sales of...products and could result in the loss of key information, expertise or know-how." However, in the case of Pressure Bio would we would underscore the importance of its Founder, President and CEO Richard Schumacher who has provided the drive and vision that has sustained this Company through years of development. Stock Liquidity Pressure Bio has a market capitalization of less than $3 million and its shares have an average daily volume over the past 30 days of 24,300 or about $6,000. The thin market for the shares can be reflected in above-average price volatility. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 13
  14. 14. 2013 2012 Revenue: PCT products, services, other 221,569$ 164,772$ Grant revenue 149,168 140,889 Total revenue 370,737 305,661 Costs and expenses: Costs of PCT products and services 104,544 78,194 Research and development 246,458 271,611 Selling and marketing 193,900 238,092 General and administrative 550,859 682,346 Total operating costs and expenses 1,095,761 1,270,243 Operating loss (725,024) (964,582) Other (expense) income: Interest (expense) income, net (8,900) (56,313) Change in fair value of warrant derivative liability (45,445) (42,012) Total other (expense) income (54,345) (98,325) Net loss (779,369) (1,062,907) Accrued dividends on convertible preferred stock (32,173) (24,414) Deemed dividend on Series J convertible preferred stock(582,548) - Net loss applicable to common shareholders (1,394,090) (1,087,321) Net loss per share attributable to common shareholders (0.11)$ (0.14)$ Weighted average common stock outstanding 12,149,267 7,712,539 Source: Company Reports and Analyst's Estimates March 31, For the Three Months Ended Income Statement (Unaudited) Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 14
  15. 15. 2013 2012 Cash Flows from Operating Activities: Net Loss (779,369)$ (1,062,907)$ Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 21,529 29,323 Accretion of interest and amortization of debt issue costs - 46,159 Stock-based compensation expense 19,040 8,868 Amortization of third-party fees paid in restricted stock 105,000 31,950 Change in fair value of warrant derivative liability 45,445 42,012 Changes in operating assets and liabilities: Accounts receivable (61,755) 65,239 Inventories 32,509 47,718 Accounts payable (140,510) 238,839 Accrued employee compensation 34,640 44,329 Deferred revenue and other accrued expenses 129,775 (588) Prepaid expenses and other current assets (23,801) (75,679) Net cash used in operating activities (617,497)$ (584,737)$ Cash Flows from Investing Activities: Purchases of property and equipment (1,531) - Net cash used in investing activities (1,531) - Cash flows from financing activities Payment of cash dividends (60,000) - Repayment of related party debt (31,118) - Proceeds from convertible debt 155,000 - Proceeds from issuance of Series J convertible preferred stock721,595 - Net proceeds from issuance of common stock - 377,454 Net cash provided by financing activities 785,477 377,454 Change in cash and cash equivalents 166,449 (207,283) Cash and cash equivalents, beginning of period 1,461 222,775 Cash and cash equivalents, end of period 167,910 15,492 Source: Company Reports and Analyst's Estimates For the Three Months Ended March 31, Cash Flow (Unaudited) Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 15
  16. 16. March 31, December 31, December 31, 2013 2012 2011 (unaudited) ASSETS Current Assets Cash and Cash Equivalents 167,910$ 1,461$ 222,775$ Accounts Receivable 278,020 216,265 269,237 Inventories, net of $50,000 reserve at 3/31/13 and 12/31/12890,853 923,362 1,069,013 Prepaid income taxes 7,381 7,381 4,739 Prepaid expenses and other current assets 103,706 83,435 143,591 Total Current Assets 1,447,870$ 1,231,904$ 1,709,355$ Property and Equipment, Net 22,444 30,282 89171 Deposits - 6,472 6,472 Intangible assets, net 72,972 83,130 133,762 Total Assets 1,543,286$ 1,353,788$ 1,938,760$ LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts Payable 1,059,336 1,199,846 890,676 Accrued employee compensation 153,978 119,338 180,437 Accrued professional fees and other 376,901 267,936 247,738 Deferred revenue 29,809 46,466 36,669 Promissory note 75,000 75,000 150,000 Dividend liability - 60,000 - Related party debt 42,357 98,675 - Convertible debt - 863,004 394,912 Warrant derivative liability 206,257 160,812 436,553 Total Current Liabilities 1,943,638 2,891,007 2,336,985 Deferred revenue 1,633 2,487 10,111 Total Liabilities 1,945,271 2,893,564 2,347,096 Stockholders' Deficit Series C convertible preferred stock, $.01 par value; 0 0 881 88,098 shares authorized; 0 and 88,098 shares issued and outstanding on December 31, 2012 (Liquidation value of $0) and on December 31, 2011, respectively Series D convertible preferred stock, $.01 par value; 3 3 7 850 shares authorized; 300 shares issued and outstanding on March 31, 2013 and on December 31, 2012 Series G convertible preferred stock, $.01 par value; 1,453 1,453 - 240,000 shares authorized; 145,320 shares issued and outstanding on March 31, 2013 and on December 31, 2012 Series J convertible preferred stock, $.01 par value; 47 - - 6,250 shares authorized; 4,650 shares and 0 shares issued and outstanding on March 31, 2013 and on December 31, 2012, respectively Series H convertible preferred stock, $.01 par value; - - - 10,000 shares authorized; 0 shares issued and outstanding on March 31, 2013 and on December 31, 2012 Common stock, $.01 par value; 50,000,000 shares 121,493 121,493 67,240 authorized; 12,149,267 shares issued and outstanding on March 31, 2013 and on December 31, 2012 Warrants to acquire preferred stock and 3,823,922 3,015,996 2,203,101 common stock Additional Paid-In Capital 17,664,727 15,940,818 13,823,875 Accumulated deficit (22,013,628) (20,619,539) (16,503,440) Total Stockholders' Deficit 401,985 1,539,776 (408,336) Total Liabilities and Stockholders' Deficit 1,543,286 1,353,778 1,938,760 Source: Company Reports and Analyst's Estimates Balance Sheet Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 16
  17. 17. Earnings Model Q1A Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Revenue: PCT products, services, other 221,569$ 235,000$ 320,000$ 245,000$ 1,021,569$ 250,000$ 400,000$ 600,000$ 900,000$ 2,150,000$ 1,300,000$ 1,700,000$ 2,100,000$ 2,500,000$ 7,600,000$ Grant revenue 149,168 150,000 150,000 50,000 499,168 150,000 150,000 150,000 150,000 600,000$ 150,000 150,000 150,000 150,000 600,000$ Total revenue 370,737 385,000 470,000 295,000 1,520,737 400,000 550,000 750,000 1,050,000 2,750,000 1,450,000$ 1,850,000$ 2,250,000$ 2,650,000$ 8,200,000$ Costs and expenses: Costs of PCT products and services 104,544 112,800 153,600 117,600 488,544 117,500 184,000 270,000 396,000 967,500 559,000 714,000 861,000 1,000,000 3,134,000 Research and development 246,458 250,000 250,000 200,000 946,458 250,000 250,000 250,000 250,000 1,000,000 250,000 250,000 250,000 250,000 1,000,000 Selling and marketing 193,900 200,000 210,000 220,000 823,900 230,000 240,000 250,000 260,000 980,000 270,000 280,000 290,000 300,000 1,140,000 General and administrative 550,859 560,000 570,000 580,000 2,260,859 590,000 600,000 610,000 620,000 2,420,000 630,000 640,000 650,000 660,000 2,580,000 Total operating costs and expenses 1,095,761 1,122,800 1,183,600 1,117,600 4,519,761 1,187,500 1,274,000 1,380,000 1,526,000 5,367,500 1,709,000 1,884,000 2,051,000 2,210,000 7,854,000 Operating profit (loss) (725,024) (737,800) (713,600) (822,600) (2,999,024) (787,500) (724,000) (630,000) (476,000) (2,617,500) (259,000) (34,000) 199,000 440,000 346,000 Other (expense) income: Interest (expense) income, net (8,900) (11,000) (21,000) (25,000) (65,900) (29,000) (30,000) (25,000) (28,000) (112,000) (43,000) (45,000) (45,000) (45,000) (178,000) Change in fair value of warrant derivative liability (45,445) - - - (45,445) - - - - - - - - - - Total other (expense) income (54,345) (11,000) (21,000) (25,000) (111,345) (29,000) (30,000) (25,000) (28,000) (112,000) (43,000) (45,000) (45,000) (45,000) (178,000) Profit (loss) before income taxes (779,369) (748,800) (734,600) (847,600) (3,110,369) (816,500) (754,000) (655,000) (504,000) (2,729,500) (302,000) (79,000) 154,000 395,000 168,000 Income tax benefit - - - - - - - - - - - - - - - Net profit (loss) (779,369) (748,800) (734,600) (847,600) (3,110,369) (816,500) (754,000) (655,000) (504,000) (2,729,500) (302,000) (79,000) 154,000 395,000 168,000 Accrued interest on convertible debt - - - - - - - - - - Accrued and deemed dividend on convertible preferred stock (614,721) (32,000) (27,000) (27,000) (700,721) (27,000) (27,000) - - (54,000) - - - - - Net profit (loss) applicable to common shareholders (1,394,090) (780,800) (761,600) (874,600) (3,811,090) (843,500) (781,000) (655,000) (504,000) (2,783,500) (302,000) (79,000) 154,000 395,000 168,000 Net profit (loss) per share attributable to common shareholders (0.11)$ (0.06)$ (0.06)$ (0.06)$ (0.29)$ (0.06)$ (0.06)$ (0.04)$ (0.03)$ (0.17)$ (0.02)$ (0.00)$ 0.01$ 0.02$ 0.01$ Weighted average common stock outstanding 12,149,267 12,200,000 13,750,000 13,850,000 12,987,317 13,950,000 14,050,000 18,700,000 18,800,000 16,375,000 18,900,000 19,000,000 19,100,000 19,200,000 19,050,000 Source: Company Reports and Analyst's Estimates 2013E 2014E 2015E Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 17
  18. 18. IMPORTANT DISCLOSURES This report has been prepared by Merriman Capital, Inc. (MCI), a wholly owned subsidiary of Merriman Holdings, Inc. MCI is a broker- dealer registered with the SEC and member of FINRA, the NASDAQ Stock Market and the Securities Investor Protection Corporation (SIPC). The address for MCI is 600 California Street, Suite 900, San Francisco, CA 94108. Many of the securities discussed in MCI’s research reports are emerging growth companies that typically involve a significantly higher degree of risk than the securities of more established companies. These securities may be unsuitable for some investors depending on their specific investment objectives, financial status, risk profile or particular needs. The price target contained in this report represents the analyst’s application of a formula to certain metrics derived from actual and estimated future performance of the company. 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Specific Disclosures Pressure BioSciences, Inc. currently is, or during the 12-month period preceding the date of distribution of the research report was, a client of Merriman Capital. Merriman Capital provided non-investment banking securities-related services and non-securities services to Pressure BioSciences, Inc.. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 18
  19. 19. Merriman Capital has coordinated research coverage for Pressure BioSciences, Inc.. The research reflects the independent opinion of the research analyst and Merriman Capital has not represented to Pressure BioSciences, Inc. that the research will recommend an investment in Pressure BioSciences, Inc.’s securities or be otherwise favorable to Pressure BioSciences, Inc.. Merriman Capital received compensation for products or services other than investment banking services from Pressure BioSciences, Inc. in the past 12 months, including, among other things, corporate services and advice on strategic initiatives, financing solutions, capital structure and publishing research. Merriman Capital, Inc. makes a market in Pressure BioSciences, Inc.. Key to investment Ratings (expected total share price return inclusive of dividend reinvestment, if applicable). As of February 1, 2013 Merriman Capital LLC added Speculative Buy into its rating system. Buy : Merriman Capital, Inc. expects the stock price to appreciate 10% or more over the next 12 months. Initiate or increase position. Speculative Buy: Merriman Capital, Inc. believes the stock price could appreciate 15% or more over the next 12-18 months if anticipated contingencies materialize, however, investors are cautioned that initiating or increasing a position presents a significantly higher degree of risk than our “Buy” recommendation. Neutral: Merriman Capital, Inc. believes the stock price is fairly valued at current levels. Maintain position or take no action. Sell: Merriman Capital, Inc. expects the stock price to depreciate 10% or more over the next 12 months. Sell or decrease position. Ratings Distribution & Investment Banking Disclosure Rating Count Ratings Distribution Count *Investment Banking Buy 9 50.00% 2 22.22% Spec Buy 6 33.33% 0 0% Neutral 3 16.67% 0 0% Sell 0 0.00% 0 0% * Percent of companies under research coverage from which Merriman Capital, Inc. received compensation for investment banking services provided in the previous 12 months or expects to receive or intends to seek in the next three months Merriman Capital, Inc. archives and reviews outgoing and incoming email. Such may be produced at the request of regulators. Sender accepts no liability for any errors or omissions arising as a result of transmission. Use by other than intended recipients is prohibited. The information contained herein is based on information obtained from sources believed to be reliable but is neither all-inclusive nor guaranteed by Merriman Capital, Inc. No independent verification has been made as to the accuracy or completeness of the information. Opinions, if any, reflect our judgment at the time the report is first published and are subject to change without notice. Merriman Capital, Inc. does not undertake to advise you of changes in its opinion or information. Member FINRA/SIPC. Copyright © 2013. All rights reserved. Additional information supporting the statements in this report is available upon request. Pressure BioSciences, Inc. (PBIO) Spec Buy Healthcare August 8, 2013 19

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