pressure biosciences, inc. - qualitystocks

Dutton Associates • 4989 Golden Foothill Parkway, Suite 4 • El Dorado Hills, CA 95762 • Phone (916) 941-8119

Denise T. Resnik, MS [email protected]

Pressure BioSciences, Inc. December 18, 2007

Note 1: EPS estimates above are calulated on basic shares outstanding.

Year EPS P/E

Current Rating History

$10.009,478

Industry:Recent Price:52-Week Price Range:

REVS PSRFiscal Year Ending: DecemberPBIO

Healthcare, Biotechnology & Pharmaceutical

$3.50 - $7.78

Symbol (Nasdaq)

2005

2006

Balance Sheet Data (mil) 09/30/07

N/AAEE

Ownership and Valuation (mil)

Target Price (12 Months)Avg. Daily Vol. (3 mo.):

$5.35

2007

2008

- - - x- - - x- - - x- - - x

- - - x55.8 x14.8 x2.0 x

- - -($1.01)($1.49)($2.10)

- - -$0.2$0.8$6.0

11/27/07$6.09

$10.0012 Months

$6.0$6.2$0.0$6.8

Cash Equivalent:Working Capital:Long-Term Liabilities:Shareholders' Equity: Time Frame:

Shares Outstanding:Inside Ownership:Institutional Ownership:Equity Market Value:

2.1931%0%

$11.7

- - -

Date Assigned:Price at Rating:Original Price Target:

x $16.5 0.7 x2009 ($0.75)E

Update Report Rating: Strong Speculative Buy

Basis for Rating We are reiterating our rating of Pressure BioSciences Inc. as a Strong Speculative Buy and our 12-month price target of $10.00 per share. The Company has developed a unique and superior technology for the preparation of biological laboratory samples and is in the early stages of commercialization of its product platform. While this quarter’s revenues were somewhat disappointing, we believe that as the sales force is now in place, sales should ramp up in coming quarters, and investors will increasingly recognize the value inherent to this technology. We expect that the shares will begin to reflect the substantial profits that we believe the Company can generate beginning in 2010. Company Description Overview Pressure BioSciences, headquartered in West Bridgewater, Massachusetts, is an early-stage life sciences company focused on the development and commercialization of a novel platform technology called Pressure Cycling Technology (PCT). The mechanisms of action of the PCT sample preparation system differ significantly from other sample preparation methods. Specifically, cell disruption, or lysis, occurs when samples are subjected to well-controlled, alternating cycles of ambient and ultra-high pressure of up to 35,000 psi in the hydrostatic reaction chamber of either of the two Barocycler instruments sold by the Company. This use of rapid and repeated alternating cycles of hydrostatic pressure at controlled temperatures controls the interactions of bio-molecules and induces cell lysis for extraction of cell components. There are two components of Pressure BioSciences’s PCT sample preparation system. The first is the pressure-generating instrument is known as the Barocycler®. There are two commercially-available models. The Barocycler NEP3229 has the capacity to process three laboratory samples simultaneously, while the smaller NEP2320 Barocycler has the capacity to process only one sample at a time. The second component is the specially designed, single-use processing containers,

Pressure BioSciences Inc.


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PULSE (Pressure Used to Lyse Samples for Extraction) Tubes, which contain the laboratory sample and appropriate buffer and/or solvent. Pressure Cycling Technology offers a number of advantages over other methods of sample preparation including ease and speed of extraction, increased yield of extracted materials, uniformity of results, safety of laboratory worker, and minimization of sample contamination. The Company’s PCT employs a unique approach that has the potential for applications in a broad range of established and emerging life sciences areas. At the present time, the Company is focusing its research and development efforts on sample preparation for genomic, proteomic, and small molecule studies, although it has patents on other applications as well. Products 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 PULSE Tubes. The Barocycler NEP3229 has an external chiller hook-up, automatic fill and dispense valves, and an integrated microprocessor with programmable logic controller accessed by an easy-to-use keypad. Barocycler NEP2320 The Barocycler NEP 2320 is a compact yet versatile sample preparation instrument providing the same Pressure Cycling Technology advantages as the larger NEP 3229 instrument. The NEP 2320 quickly and efficiently processes one sample at a time and it is designed to use a minimum amount of laboratory bench space. The NEP2320 uses external sources, including 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. Although smaller than the NEP3229, the NEP2320 provides the user with many of the features of the Barocycler NEP3229, including temperature control. PULSE Tubes PULSE (Pressure Used to Lyse Samples for Extraction) Tubes are used in conjunction with both Barocyclers described above and transmit the cyclic pressure generated by the Barocycler instruments to the sample. Specimens are placed on the lysis disk within the PULSE Tube to which the appropriate buffer has been added, the tube is placed in the pressure chamber, pressure chamber fluid is added, and pressurization begins. As pressure increases, 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, and other biophysical mechanisms breaks up the cellular structures quickly and efficiently, releasing the nucleic acids, small molecules, and proteins. ProteoSolveLRS At the end of 2Q2007, Pressure BioSciences began marketing its first pressure-cycling dependent, research-use only kit called ProteoSolveLRS (patent pending). This kit is designed for the safe, rapid, efficient, and reproducible extraction of proteins from lipid-rich samples — including adipose and brain tissues, organelles, and membrane preparations. Proteomic analysis of such samples is widely used in the study of diabetes, cancer, ALS, heart disease, and a number of other disorders related to obesity. The ProteoSolveLRS kit contains specific buffers, solvents, PULSE Tubes and instructions for use with a purchased or leased Barocycler instrument.



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Commercialization Plan Update In actualizing its commercialization plan – announced on March 27, 2007 – Pressure BioSciences has made considerable progress in some areas, and is somewhat disappointing in others. We believe that the Company’s near-term sales goals may have been somewhat unrealistic, considering the challenges the Company faced in hiring a qualified sales team. However, now that the sales team is fully staffed, and training is underway, we believe that the sales number should rise accordingly. The following itemizes each area covered in the Commercialization Plan and the Company’s progress to date: • Expansion of the Company’s domestic sales force from one full-time sales director in 2006.

While the Company’s Commercialization Plan detailed the expansion of the domestic sales force to five, as of November 12, 2007, the Company hired seven full-time sales directors in order to achieve better regional coverage. These new hires have experience selling either sample preparation or life sciences capital equipment. Many have also worked in or run laboratories. The Company is currently training this sales force and expects it to be fully operational early in 2008.

• Increased sales of the Barocycler NEP3229. As of November 12, 2007, a 10 total of Barocycler NEP3229 instruments have been commissioned — four within the quarter ended September 30, 2007. Of these four, two instruments were sold and two were leased or rented. In addition, the Company allowed the return of one Barocycler NEP3229 for full credit that was sold last year “because the sample throughput did not meet the needs of that particular researcher.” An additional 20 units have been ordered from the Company’s manufacturer.

• Commercial availability of a light-weight, more portable PCT model. As of November 12, 2007, four Barocycler NEP2320 instruments have been installed, all within the quarter ended September 30, 2007. An additional 40 units have been ordered from Pressure BioSciences’ manufacturer. Most of these units are available for sale; however several instruments are earmarked for the fully-hired sales force so each sales director will have one for demonstration purposes. We expect the Company will place another order for NEP2320s to be available for sale in 2008.

• Launch of its first PCT-dependent research-use only kit, ProteoSolveLRS This kit, which is designed to extract proteins from lipid-rich samples, was launched on June 2007. The Company expects that this combination of solvents and Pressure Cycling Technology will be a useful tool to the thousands of scientists worldwide working in the fields of obesity and obesity-related diseases. This kit provides a safe, rapid, efficient, and reproducible method for extraction of proteins from lipid-rich samples, including adipose and brain tissues, organelles, and membrane preparations, without the use of potentially harmful detergents.

• Expansion of its foreign distribution network in an effort to commercialize PCT globally in 2008. In order for the Company to be able to market the Barocyclers abroad, the Company sought approval for the CE Mark for both instruments. As of September 5, 2007, the Company has received approval to CE Mark both Barocyclers. The Company continues to work toward identifying potential collaborating research scientists outside of the US. The Commercialization Plan expected that these scientists would begin to generate data in the fourth quarter of 2007 in preparation for commercialization in the first quarter of 2008. It appears that some slippage to this timetable is possible, but we expect sales to commence no later than the second quarter.

In summary, the Company believes that, if it is successful in commercializing its technology in the sample preparation market, its financial results will be positively affected by a combination of the sale and lease of the Barocycler instruments, a recurring revenue stream from extended service contracts, the sale of the single-use PULSE Tubes, and revenues from its new ProteoSolveLRS kits.



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Research News In addition to working toward actualization of the Commercial Plan, Pressure BioSciences continues to add research and development personnel to its staff, thereby expanding the number and the scope of research and development projects being performed by its internal staff, and by its collaborators, to continue to drive commercialization efforts. The Company believes that increased investment in research and development will support its commercialization efforts in two ways: continued publication of application notes in areas already utilizing PCT, and new inventions that rely on PCT, such as the recent launch of its ProteoSolveLRS kit designed to extract proteins from lipid-rich samples without the use of harsh detergents. In other news, the Company recently announced that a study focused on the discovery and identification of potential biomarkers of colon cancer was presented on October 14, 2007 at the Annual Scientific Meeting of the American College of Gastroenterology (ACG). The study used pressure cycling technology (PCT) for the extraction of proteins from colon cancer tissue. The data were generated by scientists at Brooklyn Hospital Center and New York University School of Medicine. Results from the study indicate the presence of an apparent tumor signature protein (hCG1787564) extracted from colon tumor tissue which might be a biomarker for colon cancer. It is believed that if reliable biomarkers can be identified for colon cancer, patients can be identified and treated earlier in their disease. This news was followed up by another announcement on December 13, 2007 that scientists at the New York University School of Medicine have reported that their use of the Company's ProteoSolveLRS method in conjunction with PCT was instrumental for the identification of potential biomarkers in breast and colon cancer tissue. Results of the studies were presented during the recent LC-MS Course and Symposium, Robinson College, Cambridge, England by Dr. Paul Pevsner of the NYU School of Medicine, Department of Pharmacology. Additionally, Frost and Sullivan recently named Pressure BioSciences the recipient of the 2007 North American Frost and Sullivan Award for Technology Innovation for its “development of a method for the detergent-free extraction of proteins from lipid-rich tissues. This novel approach combines the power of the Company's pressure cycling technology (PCT) with the innovative chemistry of its ProteoSolveLRS kit, resulting in higher protein recovery, enhanced reproducibility, and significant advantages in speed and handling." The Award recognizes companies that have demonstrated excellence in new products and technologies within their industry. We believe that internal and external research into additional uses of Pressure Cycling Technology further validates Pressure BioSciences’ approach to sample preparation and adds to the attractiveness of the technology and the Company. Sources of Revenue The principal source of revenue for Pressure BioSciences derives and will continue to derive from expanded sales of Barocycler instruments, as well as the accompanying PULSE Tubes and ProteoSolveLRS kits. In addition, the Company derives income from lease arrangements for the Barocycler instruments (revenues for units under lease are recognized on a monthly basis) and extended service contracts on its instrumentation (at a cost of 10% of the purchase price of the instrument per year). These extended service contracts allow a customer who purchases a Barocycler NEP3229 or an NEP2320 to receive on-site scheduled preventative maintenance, on-site repair and replacement of all worn or defective component parts, and telephone support, all at no incremental cost, for the life of the service contract. During the third quarter of 2007 Pressure BioSciences also recorded $31,265 of Small Business Innovation Research (SBIR) grant revenue. 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. This grant is the Company’s second SBIR Phase 1 grant for studying the simultaneous extraction and purification of nucleic acids by PCT.



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September 2007 Quarter Highlights Pressure BioSciences recognized revenue for the three months ended September 30, 2007 of $138,052 compared to $92,211 for the same period in 2006. Revenue from the sale of PCT products and services was $106,787 for the quarter as compared to $92,211 for the same period in the prior year, primarily the result of an increased number of installations of the Company's Pressure Cycling Technology (PCT) sample preparation systems. The total number of PCT Systems installed during the quarter was eight as compared to three in the same period in 2006. Although this number matched our expectation, the product mix was not as expected and generated lower revenues. We had anticipated the sale of eight NEP3229s. However, revenues posted reflect the sale of two Barocycler NEP3229s, the sale of 4 Barocycler NEP2320s, and the lease or rental of two Barocycler NEP3229s. In addition, the Company allowed the return of one Barocycler NEP3229 that was sold last year for full credit “because the sample throughput did not meet the needs of that particular researcher.” The Company expects that the number of units commissioned will continue to increase on a quarter to quarter basis, however the average revenue per installation may fluctuate from quarter to quarter as it continues to drive its installed base and commercialize pressure cycling technology. Also contributing to the increase in revenue was an increase in the number of disposable PULSE Tubes sold, which are required for use by the PCT System; revenue from PCT Systems under lease; and recognition of revenue from extended service contracts. The Company also recorded $31,265 of its second SBIR Phase 1 government grant revenue during the third quarter of 2007, which was not recorded during the same period in 2006. The cost of PCT products and services was only $42,276 – just 40% of sales. This low reported cost was due primarily to the fact that during the quarter four of the Barocycler instruments that were sold were prototype NEP2320s that had been expensed in the first half of 2007, as they were developed and built. Furthermore, the Company has reduced the overall production cost of its NEP3229 by reengineering of several component parts. Research and development expenditures increased to $519,303 for the quarter compared to $324,525 in the same period in 2006. This increase in research and development expense was due primarily to the planned expansion of the Company’s research and development staff and an increase in the number of scientific projects managed within its own laboratories. Selling and marketing expenses increased to $379,448 for the quarter from $127,419 for the comparable period in 2006. This increase was the result of growth from two selling and marketing employees in the third quarter of 2006 to nine in the third quarter of 2007 (including a total of six regional sales directors). General and administrative costs totaled $578,238 for the period ended September 30, 2007, compared to $380,065 for the comparable period in 2006. The net loss for the quarter was $1,095,978 or $0.53 per share — basic and diluted — compared to a net loss of $630,539 or $0.26 per share, basic and diluted, for the same period in 2006. The comparative losses for the nine month periods ended September 30 were $183,145 or $0.09 per share in 2007 and $1,754,834 or $0.72 per share in 2006. This reduction in the net loss for the nine months was the result of a gain of approximately $2,000,000 from the sale of remaining shares of Panacos Pharmaceuticals common stock and from the recognition of an approximately $1,156,000 gain on the sale of net assets related to discontinued operations of Source Scientific, LLC. All transactions between the Company and both Panacos Pharmaceuticals and Source Scientific, LLC were completed during second quarter. As of September 30, 2007, the Company had cash and cash equivalents of approximately $6.0 million, as compared to approximately $5.3 million on December 31, 2006. The Company reiterated its belief that it has sufficient funds to support its growth objectives through the end of 2008.



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Table 1. Income Statement

9/30/2007 9/30/2006 9/30/2007 9/30/2006

Revenue

PCT Products, Services and Other 106,787$ 92,211$ 281,084$ 174,409$ Grant Revenue 31,265$ -$ 190,715$ -$ Total Revenue 138,052$ 92,211$ 471,799$ 174,409$

Costs and Expenses

Cost of PCT Products and Services 42,276$ 90,037$ 131,558$ 188,688$ Research and Development 519,303$ 324,525$ 1,518,851$ 984,844$ Selling and Marketing 379,448$ 127,419$ 986,801$ 322,803$ General and Administrative 578,238$ 380,065$ 1,683,782$ 1,665,172$

Total Operating Costs and Expenses 1,519,265$ 922,046$ 4,320,992$ 3,161,507$ Operating Loss From Continuing Operations (1,381,213)$ (829,835)$ (3,849,193)$ (2,987,098)$

Other Income

Realized Gain on Securities Available for Sale -$ -$ 2,028,720$ 517,938$ Interest Income 75,732$ 88,190$ 227,816$ 305,982$ Total Other Income 75,732$ 88,190$ 2,256,536$ 823,920$

Income (Loss) from Continuing Operations before Income Taxes (1,305,481)$ (741,645)$ (1,592,657)$ (2,163,178)$ Income Tax Benefit from Continuing Operations 209,503$ 111,106$ 253,539$ 408,344$

Income (Loss) from Continuing Operations (1,095,978)$ (630,539)$ (1,339,118)$ (1,754,834)$

Discontinued Operations

Gain on Sale of Net Assets Related to Discontinued Operations (Net of Income Tax of $218,060) -$ -$ 1,155,973$ -$

Net Income (Loss) (1,095,978)$ (630,539)$ (183,145)$ (1,754,834)$

Per Share Results -- Basic

Income (Loss) from Continuing Operations (0.53)$ (0.26)$ (0.65)$ (0.72)$ Income from Discontinued Operations -$ -$ 0.56$ -$

Net Income (Loss) Per Share -- Basic (0.53)$ (0.26)$ (0.09)$ (0.72)$

Per Share Results -- Diluted

Income (Loss) from Continuing Operations (0.48)$ (0.26)$ (0.65)$ (0.72)$ Income from Discontinued Operations -$ -$ 0.56$ -$

Net Income (Loss) Per Share -- Diluted (0.48)$ (0.26)$ (0.09)$ (0.72)$

Weighted Average Number of Shares -- Basic 2,065,425 2,422,675 2,065,425 2,424,351 Weighted Average Number of Shares -- Diluted 2,296,930 2,426,167 2,065,425 2,425,183

3 Months Ended 9 Months Ended

Source: Company filings



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Finances Pressure BioSciences finished the third quarter with $6.0 million in cash and cash equivalents, down about $800,000 from the end of the second quarter. The use of cash by operations was in line with expectations that the Company’s cash position would support operations into late 2008 (see below). It should be noted that among the factors causing the $800,000 reduction was an increase of about $260,000 in prepaid expenses and deposits. Purchase Commitments In March 2007, the Company executed a purchase order with Source Scientific, LLC under which it agreed to purchase 20 Barocycler NEP3229 units and nine Barocycler NEP2320 units to be used by its sales force. As of September 30, 2007 the Company had taken possession of all 9 of the smaller units. Finished goods will stay at Source Scientific, LLC for shipment directly to Pressure BioSciences’ customers. As of September 30, 2007, none of the NEP3229s had been completed. The Company expects all of these units to be competed and available for sale, lease or collaboration in early 2008. In June 2007, the Company executed another purchase order with Source Scientific, LLC to purchase 40 Barocycler NEP2320 units, which it expects to be completed during late 2007 and early 2008. As of September 30, 2007 the Company has not been billed for any of these units. Private Equity Raise On November 21, 2007, Pressure BioSciences announced the completed closing of a private placement in which the Company sold an aggregate of 126,750 shares of common stock at a purchase price of $5.00 per share. The gross proceeds from this transaction approximated $633,750. The shares were issued and sold to 8 accredited investors. While the Company had reported in its September quarterly that it had “sufficient cash and working capital to fund our operations into late 2008,” and we had stated in our September 12, 2007 Initial Report that our projections anticipated that the Company would seek to replenish its cash position in mid-2008 with an equity financing, the Company indicated that when presented with the ability to raise funds at this time without incurring financing expenses, it found this an attractive opportunity to increase the Company’s cash cushion. We continue to believe that the Company will seek additional equity financing before the end of 2008. We would also point out that this increase in shares little more than offsets the reduction in shares outstanding that occurred in 2006 when the Company purchased 110,889 shares from unaffiliated shareholders at an average price of $2.91 per share ($323,158 total). Outlook Pressure BioSciences plans to continue to increase its level of activity in all areas for the remainder of 2007 and on into 2008. We expect the operating losses from continuing operations to increase quarter over quarter for the next year as the Company continues to increase spending on selling and marketing activities to further raise awareness of PCT within the scientific community, as well as on its own research and development staffing and projects. In making our fourth quarter 2007 projections, we have adjusted our Barocycler sales estimates to reflect the popularity of the NEP2320 (six instead of four installations) and to give more time for the largely new sales force to place the more expensive NEP3229s (six instead of twelve installations). We have also not assumed any new leases (we will begin to forecast new leases in the installation mix after the fourth quarter gives us some idea about a “trend” in the sales/lease mix ratio). We have decided not to change our longer term unit sales projections at this time, preferring to await results achieved with the enlarged sales force before making any revisions.



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We continue to expect rising expenses will be required to support the rapid growth in sales that the Company seeks and that this will result in continuing operating losses through 2009. Even with the recent influx of $633,750 from private placement, our projections anticipate that the Company will seek to replenish its cash position before the end of 2008 with an equity financing. However, we believe that aided by sustained rapid growth for instrument sales and growing PULSE tube and kit sales and service contract revenues, Pressure BioSciences will achieve substantial profits in 2010. It should be noted that, over time, we expect PULSE tube usage to expand, not only in proportion to the increase installed base of Barocyclers but also as laboratories find additional uses for the PCT technology. We estimate 2010 earnings of $5.28 million resulting in earnings per share of about $1.51 on a 3.49 million fully diluted share base.

Table 2. Projected Barocycler Unit Sales

NEP 3229 NEP 2320 NEP 3229 NEP 2320 NEP 3229 NEP 2320 NEP 3229 NEP 2320 NEP 3229 NEP 2320

2007 1 0 4 0 3* 4 6 6 14 10

2008 18 8 26 18 36 28 46 38 126 92

2009 56 48 68 60 82 72 98 84 304 264

2010 116 100 136 118 158 138 182 160 592 516

2011 208 184 236 210 266 238 298 268 1008 900

First Quarter Second Quarter Third Quarter Fourth Quarter Full Year

Source: Company filings and Dutton estimates



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Table 3. Earnings Model

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Revenue

PCT Products, Services and Other 53,414$ 28,783$ 92,211$ 35,881$ 37,943$ 136,355$ 106,787$ 314,700$ 755,400$ 1,203,300$ 1,730,200$ 2,273,100$ Grant Revenue -$ -$ -$ -$ 93,678$ 65,772$ 31,265$ -$ -$ -$ -$ -$

Total Revenue 53,414$ 28,783$ 92,211$ 35,881$ 131,621$ 202,127$ 138,052$ 314,700$ 755,400$ 1,203,300$ 1,730,200$ 2,273,100$

Costs and Expenses

Cost of PCT Products and Services 51,546$ 47,104$ 90,037$ (23,454)$ 31,654$ 57,629$ 42,276$ 178,196$ 436,392$ 692,780$ 991,828$ 1,268,336$ Research and Development 258,819$ 401,500$ 324,525$ 444,867$ 461,532$ 538,015$ 519,303$ 560,000$ 585,000$ 610,000$ 635,000$ 660,000$ Selling and Marketing 67,379$ 128,005$ 127,419$ 205,462$ 256,530$ 350,823$ 379,448$ 600,000$ 780,000$ 825,000$ 875,000$ 925,000$ General and Administrative 689,626$ 595,481$ 380,065$ 480,024$ 481,082$ 624,462$ 578,238$ 650,000$ 660,000$ 670,000$ 680,000$ 690,000$

Total Operating Costs and Expenses 1,067,370$ 1,172,090$ 922,046$ 1,106,899$ 1,230,798$ 1,570,929$ 1,519,265$ 1,988,196$ 2,461,392$ 2,797,780$ 3,181,828$ 3,543,336$ Operating Loss From Continuing Operations (1,013,956)$ (1,143,307)$ (829,835)$ (1,071,018)$ (1,099,177)$ (1,368,802)$ (1,381,213)$ (1,673,496)$ (1,705,992)$ (1,594,480)$ (1,451,628)$ (1,270,236)$

Other Income

Realized Gain on Securities Available for Sale 517,938$ -$ -$ -$ 727,473$ 1,301,247$ -$ -$ -$ -$ -$ -$ Interest Income 108,506$ 109,287$ 88,190$ 75,731$ 71,602$ 80,482$ 75,732$ 65,000$ 40,000$ 15,000$ 60,000$ 40,000$ Other Operating Net -$ -$ -$ -$ (378,503)$ -$ -$ -$ -$ -$ -$ -$

Total Other Income 626,444$ 109,287$ 88,190$ 75,731$ 420,572$ 1,381,729$ 75,732$ 65,000$ 40,000$ 15,000$ 60,000$ 40,000$

Income (Loss) from Continuing Operations before Income Taxes (387,512)$ (1,034,020)$ (741,645)$ (995,287)$ (678,605)$ 12,927$ (1,305,481)$ (1,608,496)$ (1,665,992)$ (1,579,480)$ (1,391,628)$ (1,230,236)$ Income Tax (Benefit) from Continuing Operations (77,478)$ (219,759)$ (111,106)$ (337,011)$ (40,519)$ (3,516)$ (209,503)$ (241,274)$ (249,899)$ (236,922)$ (208,744)$ (184,535)$

Income (Loss) from Continuing Operations (310,034)$ (814,261)$ (630,539)$ (658,276)$ (638,086)$ 16,443$ (1,095,978)$ (1,367,222)$ (1,416,093)$ (1,342,558)$ (1,182,884)$ (1,045,701)$


Income (Loss) from Continuing Operations (0.13)$ (0.34)$ (0.26)$ (0.28)$ (0.31)$ 0.01$ (0.53)$ (0.66)$ (0.67)$ (0.61)$ (0.45)$ (0.41)$


Income (Loss) from Continuing Operations (0.13)$ (0.34)$ (0.26)$ (0.28)$ (0.31)$ 0.01$ (0.47)$ (0.57)$ (0.56)$ (0.51)$ (0.38)$ (0.33)$

Weighted Average Number of Shares -- Basic 2,424,189 2,426,167 2,422,675 2,311,277 2,065,425 2,065,425 2,065,425 2,065,425 2,128,800 2,192,175 2,632,175 2,565,425 Weighted Average Number of Shares -- Diluted 2,424,189 2,426,167 2,422,675 2,311,277 2,065,425 2,296,930 2,350,000 2,400,000 2,513,375 2,626,750 3,116,750 3,166,750

2006 2007 2008

Table 3 Continues on the following page



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(Continued) Table 3. Earnings Model 2006 2007 2008 2009 2010

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Revenue

PCT Products, Services and Other 2,985,000$ 3,634,800$ 4,455,600$ 5,375,400$ 7,280,320$ 8,723,820$ 10,335,820$ 12,144,320$ 210,289$ 595,785$ 5,962,000$ 16,450,800$ 38,484,280$ Grant Revenue -$ -$ -$ -$ -$ -$ -$ -$ -$ 190,715$ -$ -$ -$

Total Revenue 2,985,000$ 3,634,800$ 4,455,600$ 5,375,400$ 7,280,320$ 8,723,820$ 10,335,820$ 12,144,320$ 210,289$ 786,500$ 5,962,000$ 16,450,800$ 38,484,280$

Costs and Expenses

Cost of PCT Products and Services 1,570,662$ 1,926,942$ 2,334,022$ 2,784,702$ 3,359,383$ 3,972,095$ 4,651,087$ 5,397,127$ 165,233$ 309,755$ 3,389,336$ 8,616,328$ 17,379,692$ Research and Development 685,000$ 710,000$ 735,000$ 760,000$ 785,000$ 810,000$ 835,000$ 860,000$ 1,429,711$ 2,078,850$ 2,490,000$ 2,890,000$ 3,290,000$ Selling and Marketing 1,000,000$ 1,050,000$ 1,125,000$ 1,225,000$ 1,425,000$ 1,550,000$ 1,700,000$ 1,875,000$ 528,265$ 1,586,801$ 3,405,000$ 4,400,000$ 6,550,000$ General and Administrative 700,000$ 710,000$ 720,000$ 730,000$ 740,000$ 750,000$ 760,000$ 770,000$ 2,145,196$ 2,333,782$ 2,700,000$ 2,860,000$ 3,020,000$

Total Operating Costs and Expenses 3,955,662$ 4,396,942$ 4,914,022$ 5,499,702$ 6,309,383$ 7,082,095$ 7,946,087$ 8,902,127$ 4,268,405$ 6,309,188$ 11,984,336$ 18,766,328$ 30,239,692$ Operating Loss From Continuing Operations (970,662)$ (762,142)$ (458,422)$ (124,302)$ 970,937$ 1,641,725$ 2,389,733$ 3,242,193$ (4,058,116)$ (5,522,688)$ (6,022,336)$ (2,315,528)$ 8,244,588$

Other Income

Realized Gain on Securities Available for Sale -$ -$ -$ -$ -$ -$ -$ -$ 517,938$ 2,028,720$ -$ -$ -$ Interest Income 25,000$ 15,000$ 10,000$ 5,000$ -$ -$ -$ -$ 381,713$ 292,816$ 155,000$ 55,000$ -$ Other Operating Net -$ -$ -$ -$ -$ -$ -$ -$ -$ (378,503)$ -$ -$ -$

Total Other Income 25,000$ 15,000$ 10,000$ 5,000$ -$ -$ -$ -$ 899,651$ 1,943,033$ 155,000$ 55,000$ -$

Income (Loss) from Continuing Operations before Income Taxes (945,662)$ (747,142)$ (448,422)$ (119,302)$ 970,937$ 1,641,725$ 2,389,733$ 3,242,193$ (3,158,464)$ (3,579,655)$ (5,867,336)$ (2,260,528)$ 8,244,588$ Income Tax (Benefit) from Continuing Operations (141,849)$ (112,071)$ (67,263)$ (17,895)$ 349,537$ 591,021$ 860,304$ 1,167,189$ 745,354$ (494,812)$ (880,100)$ (339,079)$ 2,968,052$

Income (Loss) from Continuing Operations (803,813)$ (635,071)$ (381,159)$ (101,407)$ 621,400$ 1,050,704$ 1,529,429$ 2,075,004$ (2,413,111)$ (3,084,843)$ (4,987,236)$ (1,921,449)$ 5,276,536$


Income (Loss) from Continuing Operations (0.31)$ (0.25)$ (0.15)$ (0.04)$ 0.24$ 0.41$ 0.60$ 0.81$ (1.01)$ (1.49)$ (2.10)$ (0.75)$ 2.06$


Income (Loss) from Continuing Operations (0.25)$ (0.19)$ (0.11)$ (0.03)$ 0.18$ 0.30$ 0.43$ 0.58$ (1.01)$ (1.35)$ (1.75)$ (0.58)$ 1.51$

Weighted Average Number of Shares -- Basic 2,565,425 2,565,425 2,565,425 2,565,425 2,565,425 2,565,425 2,565,425 2,565,425 2,396,077 2,065,425 2,379,644 2,565,425 2,565,425 Weighted Average Number of Shares -- Diluted 3,216,750 3,266,750 3,316,750 3,366,750 3,416,750 3,466,750 3,516,750 3,566,750 2,396,077 2,278,089 2,855,906 3,291,750 3,491,750

20102009

Source: Company filings

Pressure BioSciences, Inc.


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Valuation and Conclusion We believe that as the coming 12-month period progresses, Pressure BioSciences will begin to demonstrate its ability to place a rapidly-increasing number of Barocyclers, and that the potential for substantial profits beginning in 2010 will begin to be recognized in these shares. Accordingly, we have established a 12-month price target of $10. Based on a 20 multiple of projected 2010 earnings per share of $1.51, a substantially higher 12-month target stock price could be generated even if this future value is discounted at a rate that reflects the risks to our projections. However, we would prefer to adjust our target over the coming quarters as the Company proves its ability to execute its commercialization plan. The $10 price target represents a potential gain of over 65% based on the current price, and we continue to rate Pressure BioSciences’ shares a Strong Speculative Buy.



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Analyst: Denise T. Resnik, M.S. Denise Resnik's career in the pharmaceutical industry has spanned over 30 years. For the past 24 years, she has consulted to large, global pharmaceutical companies and emerging biotechnology companies in the area of new drug development. She co-developed a training program for physicians entering the field of clinical research and has taught the program to physicians around the US and abroad. Most recently she is liaising between a large pharmaceutical company and government health agencies to develop public-private partnerships to the benefit of both entities. Prior to her consulting activities she worked in pre-clinical research at Harvard Medical School and subsequently in pre-clinical and clinical research for large pharmaceutical companies. Ms. Resnik holds a master's degree in pharmacology and a bachelor's degree in biology.

Analyst Certification: I, Denise T. Resnik, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.

Pressure BioSciences, Inc., 321 Manley Street, West Bridgewater, MA 02379, USA, (615) 503-9900, www.pressurebiosciences.com.

Dutton Associates, John M. Dutton, President, 4989 Golden Foothill Parkway, Suite 4, El Dorado Hills, CA 95762 Phone (916) 941-8119, Fax (916) 941-8093.

Information, opinions or recommendations contained in Dutton Associates' research reports or research notes are submitted solely for advisory and information purposes. The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Such information and the opinions expressed are subject to change without notice. A Dutton Associates research report or note is not intended as an offering or a solicitation of an offer to buy or sell the securities mentioned or discussed. Neither the Firm, its principals, nor the assigned analysts own or trade shares of any company covered. The Firm does not accept any equity compensation. Anyone may enroll a company for research coverage, which currently costs US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $32,000 from The Company for 4 Research Reports with coverage commencing on 09/12/2007. Reports are performed on behalf of the public, and are not a service to any company. The analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests and insure independence. Please read full disclosure and other reports and notes on the Company at www.DuttonAssociates.com. The views expressed in this research report or note accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by Dutton Associates is in any way related to the specific recommendations or views contained in this research report or note. Periodic Research Reports and Research Notes on this Company are available at our web site: www.DuttonAssociates.com. © Copyright 2007, by Dutton Associates

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