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PBIO: Update on Third Quarter Financials

By Grant Zeng, CFA

OTC:PBIO

For the third quarter of 2016, products and services revenue increased to $500,949 from $481,452 for the same quarter of 2015, an increase of 4.0%. This was a record high for products and services revenue in a quarter and marked the first time that products and services revenue exceeded half a million dollars in a financial quarter.

For the 3Q16, revenue was driven primarily by the sale of instruments, which also set a record high with $383,789 for the quarter, compared to $340,084 (the previous record) for the same quarter of 2015.

Grant revenue decreased to $34,385 for Q3 2016 from $98,882 for the same quarter in the previous year. The company expects grant revenue to begin to increase in the fourth quarter of 2016 and continue to increase into 2017.

Total revenue decreased to $535,334 in the third quarter 2016 from $580,334 for the third quarter of 2015. This decrease was due to the decrease in grant revenue.

Operating loss for the third quarter of 2016 was $451,807 compared to a loss of $690,728 for the same period of 2015.

Adjusted net loss per common share was $(0.02) for the quarters ended September 30, 2016, compared to net loss per share of (0.03) for third quarter of 2015.

As of September 30, 2016, PBIO (PBIO) held $41,939 in cash and cash equivalents.

Balance Sheet Boosted by Recent Financings

On November 14, 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 November 3, PBIO announced it closed a $2 million line-of-credit with an accredited investor.

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.

Operational Highlights for 3Q2016 and Near Term Goals

During the third quarter, PBIO’s new ISO-certified contract manufacturer completed the build of four Barocycler 2320EXTREME instrument systems. All four were purchased by customers in Germany and Japan.

In July, the Children's Medical Research Institute (CMRI) was named by Vice President Biden as one of four preeminent cancer research centers in Australia to collaborate with the U.S. National Cancer Institute in President Obama's Cancer Moonshot initiative. CMRI purchased the first three commercially-available Barocycler 2320EXTREME instruments.

PBIO made measurable progress towards its goal of achieving CE Marking for its new next-generation Barocycler 2320EXTREME instrument before the end of 2016.

PBIO was invited, along with representatives from SCIEX, CMRI, the Institute of Molecular Systems Biology (Zurich, Switzerland), Beckman-Coulter, Ilumina, and Next-Bio to make presentations at the Gala Opening of The ACRF International Centre for the Proteome of Human Cancer (ProCan). ProCan is located in newly renovated laboratory facilities at CMRI near Sydney, Australia.

Near-Term Goals for Fourth Quarter 2016 and Early 2017

-
Continue to implement a sound path toward financial self-sufficiency and future growth and profitability.

- Drive acceptance and commercialization of the new Barocycler 2320EXTREME.

- Support and expand its co-marketing program with SCIEX.

- Significantly expand sales and marketing capabilities.

We Expect Significant Revenue Growth in 2016 and Beyond

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 2016 and beyond. Specifically, we believe products and services total revenue for 2016 will surpass the $2.0 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.

For a free copy of the full research report, please email scrinvestors@zacks.com with PBIO as the subject.

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