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PBIO: Update on Fourth Quarter and Year 2016 Financials

03/23/2017
By Grant Zeng, CFA

OTC:PBIO

Total revenue for the fourth quarter ended December 31, 2016 was $419,711 compared to $364,119 for the same period in 2015, a 15% increase. This increase was due to products and services sales growth.

For the fourth quarter of 2016, products and services revenue was $365,262, compared to $235,600 in the same quarter of 2015, a 55% increase.

Sales of consumables were $50,054 for the fourth quarter ended December 31, 2016 compared to $29,521 for the same period in 2015, an increase of 70%.

Grant revenue for Q4 2016 was $54,449 compared to $128,519 for the same period in 2015.

Operating loss for Q4 2016 was $1,177,205 compared to a loss of $935,746 for the same period in 2015. This increase was due primarily to inventory valuations and increases in marketing/IR activities, off-set by an increase in total revenue.

For the year ended December 31, 2016, products and services revenue was $1,794,749, compared with $1,409,991 in the year ended December 31, 2015, a 27% increase.

Sales of consumables were $199,873 for the year ended December 31, 2016 compared to $146,408 for the same period in 2015, an increase of $53,465 or 37%.

Grant revenue for fiscal year 2016 was $181,738 compared to $387,700 for the 2015 fiscal year.

Total revenue for the fiscal year ended December 31, 2016 was $1,976,487 compared to $1,797,691 for the same period in 2015, a 10% increase. This increase was due to products and services sales growth.

Operating loss for the year ended December 31, 2016 was $3,735,653 compared to a loss of $3,565,182 for the same period in 2015. This increase in operating loss was due primarily to increases in R&D, Sales and Marketing, and IR expenses, off-set to a certain extent by an increase in total revenue.

As of December 31, 2016, PBIO held $138,363 in cash and cash equivalents.

Balance Sheet Boosted by Recent Financings

On November 14, 2016, PBIO (OTC:PBIO) announced the initial close of $610,000 in gross proceeds in a $2.5 million Private Placement. Three accredited investors participated in the financing. One or more additional closes in the financing are expected to occur in the near future.

Pursuant to the Subscription Agreement, the Company issued 1,525,000 shares of restricted common stock at $0.40 per share and Common Stock Purchase Warrants exercisable into a total of 1,525,000 shares of restricted common stock at $0.50 per share. The Company received net proceeds of $512,750 after subtracting legal and placement agent fees related to the financing.

On October 28, 2016, an accredited investor purchased from PBIO a Promissory Note in the aggregate principal amount of up to $2,000,000 due and payable on the earlier of October 28, 2017 or on the seventh business day after the closing of a Qualified Offering. On the same day, the Company received its initial $250,000 advance pursuant to the Note and issued to the Investor a five-year Common Stock Purchase Warrant to purchase 625,000 shares of the Company's common stock at an exercise price equal to $0.40 per share. The Investor is obligated to provide the Company $250,000 advances under the Note, but the Investor is not required to advance more than $250,000 in any individual fifteen (15) day period and no more than $500,000 in the thirty (30) day period immediately following the date of the initial advance. Notwithstanding the fifteen (15) day period limitation, on November 2, 2016, the Company received a second $250,000 advance pursuant to the Note and the Company issued to the Investor the Second Warrant to purchase an additional 625,000 shares of the Common Stock.

Interest on the principal balance of the Note is to be paid in full on the Maturity Date but may be prepaid without penalty. Interest will be assessed between 10% and 18% as more clearly delineated in the Note. The Investor will also receive 100% warrant coverage on the amount borrowed within seven days of each advance, with an exercise price of $0.40 and a term of five years. The Investor will also receive an origination fee of 5% of the amounts borrowed, payable in cash or in-kind.

This is a credit line with very favorable terms, including warrants priced significantly above market price. We believe access to this capital will allow the company to increase its focus on the continued expansion of its sales and marketing capabilities, enhancements in infrastructure, improvements in efficiency, and other measures that will help to increase revenue.

We Expect Significant Revenue Growth in 2017 and Beyond

In Feb 2017, PBIO announced that the Company has achieved CE Marking for the Barocycler 2320EXTREME, the Company's recently released, next-generation PCT-based sample preparation instrument. PBIO is now permitted to begin sales of the Barocycler 2320EXT in the European Economic Area.

When the CE Mark is affixed to a product, it signifies the manufacturer's declaration that the product meets all applicable EU safety, health, or environmental requirements. Achieving CE Marking requires substantial cost, time, and effort from the manufacturer, but allows the product to be marketed and move freely throughout all 31 countries in the EEA that require the CE Mark.

The Barocycler 2320EXT is the most recent addition to, and the next generation of, PBIO's Barocycler family. It is a compact, bench top instrument offering many features and benefits not found in PBIO's earlier Barocycler models, such as data logging options, user-level security, computer-operated control with touch screen programming, and the ability to customize multiple pressure cycling parameters. These and other features have already positioned the Barocycler 2320EXT as an instrument of choice for life science key opinion leaders worldwide, when preparing protein samples for analysis.

Achievement of CE Marking for the Barocycler 2320EXT is an important next step in the company’s commercialization plans for this powerful and enabling sample preparation instrument, especially since CE Marking is required prior to selling the Barocycler 2320EXT to the large and potentially lucrative biopharmaceutical market in Europe. The company recently signed agreements with several strong distribution partners in Europe, the SCIEX co-marketing agreement is entering its second year (SCIEX is a global provider of laboratory instrumentation to the life sciences area, with a large presence in Europe).

With the significantly improved balance sheet and expanded sales and marketing capabilities, as well as the newly established multi-national co-marketing partner SCIEX, we continue to believe revenue will grow significantly in 2017 and beyond. Specifically, we believe products and services total revenue for 2017 will surpass the $4.50 million mark.

These increases will be driven by sales from both existing and new products (instruments and consumables), from the Company’s expanding distribution network, and from the additional sales and marketing personnel the company is committed to hire.

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