Richard Schumacher - CEO

Thomas Pfister - RedChip Companies Geoff Scott - Scott Asset Management Alan Stone - Wall Street Research

Greetings and welcome to the Pressure BioSciences, Inc. Second Quarter 2016 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your CEO, Mr. Richard Schumacher. Thank you, Mr. Schumacher. You may begin.

Thank you, Tim, and welcome everyone to our second quarter financial review and business update. Before I begin, I’d like to read some cautionary statements. The following remarks may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, those detailed from time-to-time in the company's filings with the Securities and Exchange Commission. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances upon which any such statement is based. So, the agenda today is, I'll give a brief overview of the second quarter 2016 financial results. I’ll then jump into a general business update for the last three months. And then afterwards, I’ll certainly be pleased to take a few questions. So, starting with the financial results, we're very pleased with both the financial and operational achievements of the second quarter and as many of you have heard me say before we believe the PBI is at an inflection point in 2016, and this includes both financially and operationally at an inflection point, and we're excited about it, we've worked hard, the team here has worked incredibly hard to get to where we are and we're looking forward with a lot of anticipation to the second half of this year and after. We've met or exceeded pretty much every significant milestone or performance, improvement that we set. Many of you've been on the calls before and reading the emails, you've seen the guidance we've given, we've been very clear about what we wanted to do for each quarter. And I believe that we met or exceeded every one of these milestones to-date. We've several more to go that we have for the year and our expectation is to do everything we can to meet or exceed those milestones also. So, it's with much appreciation that I say thank you to the very loyal, hardworking team at PBI. Remember this is the same company, we have nine employees counting myself. And it’s the same nine employees basically that we've had with the exception of one or two positions have changed for the last four years. And over those four years, we've added on a 100 -- over a 100 customers. We've developed a dozen different applications and consumable products, we've developed three different instruments. We now have a number of instruments closing in on 300 that are out in the field. All of this is being done with the same force of nine individuals that are working quite hard to do it. And we're looking forward to what's going to happen in the future as we continue to grow the company. Financially for the first quarter we reported total revenue of 510,963 and this compared to 413,104 for Q2 2015. This was an increase of -- in total revenue of about 24%. Part of that total revenue is -- and a very important part are our products and services. Our products and services revenue which is primarily products was reported at 474,187 and this compared very favorably to 333,575 for the same three month period in 2015. This was an increase of 42% in our products sold during the second quarter of 2016. The drivers here were primarily our instrument sales which increased 43%, but also our consumables sales which increased 29%. Our sales went from 56,513 to 72,773 which is a record quarterly revenue for consumables, so very excited about that because as many people know from what I've said before this is a razor-razor blade story and this is a story in which believe the razor blades or the consumables are going to overtake the instruments sometime in the near future and that’s what's going to drive this company to we think a much better valuation for all shareholders. Grant revenue was at 36,776 compared to 79,529 in the second quarter of 2015. So the bad news is that grant revenue is down. The good news is that we believe it was down only for a short period of time. The money is there for us, we've had some -- we're waiting for some machine shops to get back to us with some parts that were ordered and until these parts arrive which we think will arrive very soon, there is little we can do on this grant. This is a grant that’s using PCT, pressure cycling technology, as the basis for extracting DNA from samples, we think that certainly most of our customers are using our PCT Barocyclers for extracting and manipulating and processing proteins and some with lipids, but there are several that are using it for nucleic acid for DNA. In particular, we believe that there is a possibility that this instrument with some modifications could actually be better, be as good if not better than what's on the market now and that's probably one of the biggest areas of biotechnology right now, is extracting and studying DNA. For a very large number of reasons and we have a reason to believe to that the Barocycler with modifications could probably be a very good instrument in front of the DNA analyzers that are out there, the sequences. So we're excited about this, we're waiting for parts, we're building different parts, the money isn't going to disappear and the good news also is that even though we lost $43,000 in grant revenue we made it up multiple times through our product sales increases. Our operating loss for the second quarter 2016 was a little bit over a $1 million which compared within $3,000 of our operating loss in the second quarter of 2015, so we had a slight decrease $3,000 negligible increase, but what it says is that even with all the things that we've done in the second quarter we continue to do our best to keep an eye on expenditures and keep expenditures under very tight control and it's a tough situation because we're trying to increase exposure, increase sales and do many other things with the company, and yet we've got to watch what we're spending. So we don't have a large budget to do that with. So I am very happy that we've kept the operating loss at about the same level as the first quarter and yet we introduced a whole new instrument. We went to several shows and we did a lot of things that we think are going to bring exposure to the Company and to our product line. So the earnings per share for the second quarter were actually a $0.04 earnings on basic calculation and on diluted calculation it was a breakeven zero earnings per share and this compares to a loss per common share of $0.07 for the second quarter of 2015. A lot of this is derivative accounting when the stock changes when the stock goes up, it hurts the numbers and when the stock goes down, it helps the numbers. For the six months period on the June 30th, we reported total revenue of 1,021,442 which again compared favorably to the six months total revenue of 853,238 for the first six months of 2015. This was an increase of about 20%. Same as with the quarter products and services revenue led the way over grants. Products and services revenue was 928,538 compare to 692,939 for the same period in 2015, same six months. So we're looking at an increase of 34% in product and services revenue in the year-to-date as compared to 42% in the second quarter. Our product revenue drivers were the same in the six months as they were for the past three months. Instrument sales which increased 42% and consumable sales which increased 21%, went from 96,000 to a record half year revenue of over 117,000. So we're very happy with the product revenue and also with the consumables increase. Grant revenue was at 92,904 for the six month period compared to a 160,299 for the first half of 2015. So it was a drop of 70,000 roughly $70,000. Again we believe its short term based on the waiting for parts that we've ordered that is taking longer than we expected. When these parts come in we'll start working on the grant again in earnest and we think that's going to happen most likely in September. We're looking forward to that. The operating loss for the first half of 2016 was 2,106,641 and this compared to 1,938,708 for the first six months of 2015. So, we had a small increase over the year -- year-to-year of -- in our operating loss of about $200,000. This increase was related primarily to additional costs associated with the design and development and then the build of the new Barocycler 2320EXTREME, that everyone I think has probably read about. It's also -- the operating loss also increased because we added a full time PhD level electrical engineer, very important to our plans moving forward and to the progress of the company. And we also increased IR expenses, Investor Relations expenses as we were raising money and needed to get the word out to investors of what we think is a terrific company they should look at possibly as an investment. The loss per common share for the first six months of 2016 was $0.20 both basic and diluted compared to a loss of $0.14 for the first six months of 2015. At this point I plan to briefly comment on several operational strategic events of the second quarter. And in the few weeks sense the end of the second quarter at June 30th, and as reported in our 10-K that we filed yesterday and the press release that was sent out earlier today. We believe that many of these events are extremely important to the stability and growth of our company going forward. Then I'll open up the lines for Q&A. So, when you look at the operational achievements of the second quarter of 2016, first of all we completed a very intensive 18- month -- 16, 17, 18-month program to develop the next generation PCT based instrument system which we call the Barocycler 2320EXTREME. Recall we had the Barocycler 2320, we did some minor modifications a year and a half ago and enhanced it. But this is a complete overhaul, completely new instrument, it looks and acts the same as the previous one, but it has many more bells and whistles, many more advantages then the previous. So, the previous instrument, the 2320 was a good instrument in its own right, we sold over several hundred. So we're very excited about the EXTREME. We did this all in-house. Both because we have the expertise and because we don't have the cash to send it out. So, we designed, developed, built the breadboard, built the first instrument, all in-house and when that was done we turned it over to our new contract manufacturer, CBM, they're located about 10 miles from here in Taunton, Massachusetts and they are an ISO certified builder that builds equipment for a number of companies including several major multi-billion dollar companies. Very excited about working with these guys and we turn it over to them and they built the first five systems by the middle of June. They're building it under ISO, they had I think at the end 400 pages of notes, they're putting it all together and this is going to be build and an ISO certified -- ISO 9001 certified laboratory, so that we not only have the ISO certification, but we also are chasing down our CE mark which is required in about 86 countries around the world, and not just European countries where it started, but about over 80 countries around the world to my knowledge still require a CE mark, which is an additional level of testing, it has to go through quite an additional level of testing that it has to go through. The Barocycler 2320 was CE marked and has been CE marked all this time. It's not only getting it initially but then keeping the CE market which means annual visits and annual reviews, we're doing the same for the 2320EXTREME and we're getting pretty close considering that we started this, we couldn't start it before the instruments were built. So it's started a month or month and half ago and we're getting pretty close. We feel pretty confident that we're going to be able to pass all of the tests and get our CE mark in the very near future. 2320EXTREME is this instrument that does so much more than the 2320 and it does it because some of the key opinion leaders and other people that we respect in the business gave us their thoughts and their recommendations and said things like, can you make the chamber bigger? Can we run more samples? Can you develop software so that we can go to pressures and then not have to come all the way back to what we call ambient which is what we're under at 14.5 psi every day. But come back to any pressure, so maybe go 10,000 and coming back to 5,000 go to 15,000. They’d like to look at how the effects of these pressures could affect their samples. And so many more bells and whistles, computer driven not microprocessor driven, bigger chamber, more robust, better heating unit, larger chamber we're very excited. A lot of credibility, lot of thanks to everybody led on the engineering side by Dr. Ed Ting, one of the world's preeminent high pressure engineers and led on the applications side by Dr. Alexander Lazarev, just a superb protein chemist all his life. And then of course on the marketing end by Dr. Nat Lawrence who runs our Sales and Marketing program and gave us a lot of input on what he believed we needed to have a successful release into the market. So thanks to these three key individuals, these three officers, they've been with me now for over 10 years, all three came on Board in 2006. They’ve all celebrated their 10th anniversary. We've gone through a lot over those 10 years. We feel like we're on the cusp of -- honestly we believe we're on cusps of greatness coming up and I just am so happy for these guys to have stuck with us. All of us shareholders and happy that we're at a point now where we believe we're right on that inflection point. So thanks to our three officers as well as the other seven individuals -- six individuals in the Company who have supported me and them throughout the way, and many of them had been with us for almost as long a period of time, 6 to 10 years. So we have our new system and as we mentioned we immediately sold all five that came off the assembly line, three went to the Children's Medical Research Institute near Sydney, Australia and in there, in that facility they have a cancer research center called ProCan. And one went to an Ivy League school that has a great reputation for research and one was sold to our Chinese distributor who feels that this is going to sell perhaps even better than the previous version because of the new bells and whistles. In July Vice President, Biden, was in Australia. The White House put out a press release on I believe the 16th of July and said that our Vice President, Biden, mentioned that he's with four preeminent cancer centers in Australia and that these were all four were named as official collaborators with U.S. National Cancer Institute in what is called the Cancer Moonshot Initiative. This was brought about initially by President, Obama, and the State of the Union. He talked about trying to accelerate cancer research, trying to do in the next five years that would normally take 10 years or longer. He's putting a $1 billion, he's asked for a $1 billion to support this in just a year and half the second half of this year and all of next year and isn't it great. We're just so, so happy that our first three instruments, of the brand new instrument that we spent 18 months developing that we think is a terrific enhancement to the previous instruments we have, the first three went to a major cancer center that is a collaborator, an official collaborator to the National Cancer Institute and part of the Cancer Moonshot. So we're very excited about that. I mentioned that we started the process to achieve our CE marking for this instrument. We also mentioned several times in writing and even last -- the last quarterly call that PBIO was added to the high performing Richmond Club Index which is an index in Toronto, Canada and elsewhere, that has outperformed the S&P Index by an average of 11% each year for the past 10 years. In addition in the second quarter, scientists from six different research groups made presentations at the major meeting of the year in the U.S. for mass spectrometry. Remember mass spectrometers are instruments that cost anywhere from $300,000 to $500,000 up to a $1 million to $1.5 million and they've become the gold standard instrument to be used when you're studying proteins, to understand proteins. Our system, our PCT system sits in front of the mass spectrometer and we believe makes the mass spectrometer better. Our system is there to break open samples, to process samples that are then placed inside of the mass spectrometer and we believe that we can do it with higher quality and better than the methods that are out there on the market now. And we also believe that at least one if not more of the six major mass spectrometry companies believe it. And that company is SCIEX, because as you know in early January SCIEX announced that they had signed a co-marketing agreement, a two-year exclusive worldwide co-marketing agreement with us to co-market our system to their customers to have our system in front of their mass spectrometers. Now, going back to the Children's Medical Research Center, if you go through today's press release there is a link to a video in which I'm being interviewed on the -- in the room, in the large room of the NASDAQ talking about the Cancer Moonshot and how we're going to play a role in that. We think Children's Medical Research Institute is the first of what we hope to be many, many cancer research centers that will be purchasing our system for use in their work. I'll remind everyone of a couple of quick things that happened in Q1, because this is a Q2 call but it's also a fiscal half year call. We raised approximately 1.4 million in the first quarter, of a $6.3 million deal and we closed the deal on March 31st and with the 6.3 million that came in we paid off about $3 million of floorless debt that's now gone forever and we were able to run the company and build the company from last July to now, using the remaining cash and to get us where we are now, which we think is a very good situation. I also want to remind everyone on the phone call and who'll be listening on the replay that all five members of the company's Board of Directors participated in this $5 million pipe [ph] to the tune of almost $200,000 from the Board of Directors and most of the Board participates in almost every deal we have out there and some of the Board is known to be buying stock in the open market on a routine basis. So, this Board is very much behind this company in terms of supporting its stock. As I mentioned we added a PhD level electrical engineer, terrific electrical engineer that we needed -- sorely needed too, because we're developing systems that are going to be used in the Cancer Moonshot and other great initiative. We got to make sure that this thing works, high quality each time and every time that it's used. We mentioned that SCIEX did a deal, a co-marketing deal with us, besides also did a deal with Children's Medical Research Institute. They've joined forces with the CMRI to advance the promise of precision medicine. CMRI is testing over 70,000 individual tumor samples, looking for biomarkers and they're going to be using PCT-SWATH, they're going to be using both Pressure Biosciences PCT sample preparation and SCIEX's SWATH-Mass Spec on the back end. And so they're combining the front end with the back end and using what professor Aebersold, one of the top protein chemist in the world, nicknamed PCT-SWATH. PCT through [ph] SWATH for SCIEX. We also participated in a -- we held a workshop and we participated with SCIEX, we had SCIEX come in and help present at the workshop at the American Study for Mass Spectrometry Meeting, just in early June. So, we're starting to do things with our friends at SCIEX. Near term goals, basically the second half of the year, we have started and we want to continue on our sound path towards financial self-sufficiency and future growth and profitability, we believe that it will take us somewhere between 800 and 1,000 instruments in the field since its razor-razor blade story to get the profitability. We have a close 300 now. How do we get the next 500 to 700? Well, if there is a 1,600 mass spectrometry labs in existence and we're in about 25 right now, our low hanging fruit is to get ourselves known and exposed to the scientist that can use the quality and the other assets of the Barocycler 2320EXTREME as part of doing their mass spectrometry. And our deal with SCIEX is we think going to leap frog us there. We've been doing it one at a time as a small company, now we have the power of this much larger company to help us, they’re in over 100 countries worldwide, many with their own sales force and distribution forces. We plan to continue to increase our product and service revenue and also our grant revenue quarter-to-quarter and year, that is our goal. We want to drive acceptance and commercialization of the just released Barocycler 2320EXTREME and we have put together a number of programs that we've already started to help drive under the exposure, the acceptance and then the installation and sale of these instruments. We want to support and expand our co-marketing program with SCIEX that's absolutely a key to our second half of this year. We want to expand our sales and marketing capabilities to reach into new countries, investigators and fields of use. We have started the process, we hope to have started it earlier this year, but it became very clear with limited funds that had to make a choice with the cash coming in. Would we put it towards developing and finishing the development of the new EXTREME instrument, or where we put it towards bringing the first couple of sales people? We decided and I think rightfully so that we needed to get this instrument. We needed this instrument out in the field. This instrument has so many more capabilities than the previous instrument and there was nothing that bad with the previous instrument, so you can imagine how good new one is. We are now ready with the instruments released and already sold and in the field. We're now ready to expand our marketing and sales capabilities. And as said in today in today's press release, I think you will see a measurable progress month-by-month until the end of the year and next year and how we're increasing the capabilities of our sales and marketing. I get very excited when I think about this. I look at what this company had done. We've gone from $100,000 to $250,000 to $300,000 or $400,000 and now back to back $500,000 quarters and we're doing this with minimal cash and a sales force in the field of 1 person, Roxana and now she is half-time working in marketing with SCIEX and half-time in Sales and yet we've still done a terrific job of increasing our revenue numbers. So I am excited about the potential of what happens when we bring in four which is our goal, four sales people, starting very, very soon. And again, stay tuned I think you'll see measurable progress in this area very, very quickly. And we want to continue our targeted uplift. I have a call tomorrow for instance with the gentlemen, with the firm actually that we're working with, we want to continue our work towards an uplift in NASDAQ, New York stock exchange. It is difficult to think that we can complete it this year. We're going to do our best to try, but our goal is to get back on NASDAQ and hopefully we will do it this year. So Tim as this point, I need to take a breath and a little water and have you open up the lines for any questions.

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from line of Thomas Pfister of RedChip Companies. Please proceed with your question Thomas.

So just my question here, do you have an estimate on what percentage of current customers or current users of Baro or you PCT technology are interested in upgrading to the 2320EXTREME?

We don't, but from the little bit we've heard back, we needed to be careful because four months ago we were not sure when it was going to get done and we had all hands on deck and we got it done by mid-June and we were able to sell those first five units. Our goal is -- it's a good point, I mean someone asked me yesterday, what's the plan on growing the sales? And I said well, the plan has many facets, but certainly in talking about the customers, there's two clear customer bases right now. There is the existing customer base, some of whom have had an instrument for five-six years and some of them had some for a year or two. And these are customers that we're going to go to now that the instrument is out. I think we'll wait until the CE mark is done and again we think that'll be some Tom -- Thomas, but -- so that's one group we're going to go to the existing, close to 300, over 275 customers who purchased the existing system and let them know why they should consider the new one. And then of course the major low hanging fruit is going to be the tens of thousands of labs that have never heard of us or never heard pressure cycling technology or have slightly heard of us and to get in front of them, starting very importantly with the mass spectrometry labs.

And then I guess my next question here relates to some of the highlights trying [ph] to get at that low hanging fruit. So, I believe you mentioned earlier you're looking to hire four new sales staff. Now just as -- what's kind of the plan for this staff? Are they all going to be in internal sales or some of them are going to work with SCIEX and are you considering bringing in any other third-party distributor?

That's a lot of questions here. We -- I think I should make it clear that our deal with SCIEX is a deal that does not allow us to do a similar deal with any of their competitors, and there are five major competitors that are around the same size as SCIEX in terms of market share and they all have very good instruments. SCIEX we think happens to have the best now with their SWATH data reduction and their 5,600 instrument, but we're not inhibited from going to the other companies customers. So, the main part of these four sales people coming in and we're going to hire them, they're not going to be here, it's not going to be like a telemarketing group, we're going to hire somebody on the West Coast, somebody in the Mid-West, certainly some and probably two in the East Coast, Roxana needs to put more time in to SCIEX, she's juggling both sales and SCIEX right now. So, she's still handling sales from New England and Mid-Atlantic. So, we'll hire two here. All four of these individuals will be addressing direct sales and going out on the road probably 60% or 70% of their time. Direct sales of our instruments and the key area are going to be the mass spectrometry labs, regardless of who they're using. Now if the user is a SCIEX user, we don't have to spend a lot of time selling them, that will Roxana's job and Dr. Lawrence's job to follow-up on all the leads that are being generated from our friends at SCIEX. So, our four sales people will be going after the customers of the other five major companies and there are thousands of those customers.

Okay thanks so much for the color there and I just have a one final question. So, with regards to the CMRI cancer tumor initiative, that seems like a significant amount of work and a pretty significant amount of samples are going to be going through there. So, just for kind of a usage rate, how does that kind of impact PBIO's consumable [ph] sales?

Well, it's certainly impacts it. They're going to test minimum of 70,000; they want to do more. With that testing you need to do trial runs, you need to run controls, you need to do a lot of things. So that's probably 80,000 tests. Our tubes run in the $2 range, so you're talking about $150,000-$160,000 just from one site. We believe that there will be many, many sites that will be part of the NCI Cancer Moonshot initiative. So it will impact and I think that one of the issues of having run a lab for many years in my life, I know that as a Head of a Lab that I buy an instrument for a specific reason and I use that instrument for that reason. Often that instrument I bought could be used for other things, but I just didn’t have the time and you go to the root of least resistance and what changed is I had a sales person from a company, Thomas coming in all the time, every month, bringing in papers and explaining Rich, did you think about using the instrument you purchased from me for this reason or this. I said I had no idea it could be used for that absolutely. And that's our sales person are going to do. So I am excited about the fact that bringing on new customers means more consumables, but going back to existing customers and explaining all the other applications that they have no idea right now that this instrument can be used for is also going to bring about we think increased volume in our consumables.

[Operator Instructions] Our next question comes from the line of Geoff Scott of Scott Asset Management. Please proceed with your question.

You said that 5 of the 2320EXTREMEs were manufactured and they were all sold, talk to me about the productions schedule for the third and the fourth quarter?

We have parts, we have two instruments that are just being finished now. We have two more instruments where the parts are being dropped off tomorrow or Thursday, or let’s call it a bit later this week. We have parts for 14, so that's four of the 14, so we have part with 10 more. We are going to try to get this every -- for the time being every two instruments every two weeks. Pretty soon it's going to get down the two instruments every week. And Jeff, by six months from now I believe they could be doing an instrument a day, if we had to do that. So getting the instruments built, now they got to be built right, they go to be built under ISO, it's extremely delicate. I mean you have to have manufacturing controlled procedures for everything. You have to dot every I in cross every T. So we're taking it -- they're taking it a little bit slow right now because they're making sure that everything gets covered. Pictures, 1,000 different pictures, et cetera. But I think over the course of this year as we start to build up we believe our sales, we're going to build up the ability of our contract manufacturing to build from two every two weeks to two a week to even one a day if that's what’s required.

If you're doing one a week that would be 13 per quarter, that's $40,000 each and that $520,000 quarter machine [ph] sales, does that --.

Yes, that is, but again that's the rate that it'd be great to sell that because obviously we're closing in on -- I mean our product sales and instrument sales are as you saw from the press release in the $250,000 to $350,000 range, $300,000 range. Love to get to $400,000, $500,000, $600,000, but and love to get to it in the very near future in 2016. I don't believe that the ability to build these instruments is going to be a bottleneck for us. Right now we are a small company that is not flushed with cash, so what's more important probably is having the cash to buy all of the parts that are required to build the instruments. The guys are very good and they will build up to one a day and Geoff, it doesn't mean we’d stop at one a day. They’re a real manufacturer. Trust me if things are going so well that at some point in time we needed two or three a day, they could build two or three a day. But with their current staff I believe that they could do one a day by the end of the year. So your numbers work for the next few months, but they then get better.

I'd love to have probably [ph] manufacturing one day, but consumables were substantially higher this quarter than they ever have been, is that a permanent increase or does that include creates some stocking in Australia for their inventory of future usage?

Well, it certainly included some stocking in Australia, but they did not buy -- I can assure you they did not buy seven years’ worth of stocking. They bought one year and we're hoping that that one year actually gets used up sooner than one year. They do not want to be caught where we as a small company may have sales that are increasing and we put them on back order. So they did buy a years’ worth of consumables. I believe consumables -- you know consumables we're not that bad this time last year, they were 50,000 versus 70,000. Our consumables as you're seeing Geoff have grown over the past two or three years. So that -- and I think we're just at the tip of the iceberg. We're going after every lab that's going to be part of this Cancer Moonshot initiative to try to explain to them that if you want to get your best results, you got to start upfront with your best method to prepare your sample and that's PCT.

It would be unrealistic to think that consumables would be up another 20,000 in the third quarter?

I think it would be unrealistic to think it'd be up another 20,000. But it's not unrealistic to think that we could in the next six weeks bring on board another major cancer center that might want the instrument and then they would need, I would suggest to anybody that you want to take on half a year, but probably years’ worth of inventory because it moves faster than you know and you don't want to be back ordered.

Last question, on the inventory, on the balance sheet there was a $1 million worth [ph] I think, does any of that represent the old 2320's?

I knew you'd ask that. There are two new 2320's and maybe two used with a very small value on inventory. It was textbook, but it rarely happens, we had 100 2320's a few years ago right? And we're selling them and as we got down to 25 we said we got to -- are we going to place another order or are we going to build a new instrument? And we unanimously said, we got to build a new instrument, but how are we going to do it, but we did it. And then we had to try to play the game of building it fast enough so that it gets out in the market, but selling the others fast enough so they’re not left and people say, oh I don't want the old one. I think the old -- so the old ones are going to sell regardless. Because the new one is more expensive, it has -- it's more high powered and not everybody needs all those bells and whistles. So, someone's going to buy a Nova [ph] and not a Cadillac, we know that. So, I'm going -- the problem we're going to have is, we may not have enough of the older ones, we've sold them too much and now we're down to just two. So we actually have a program where we're going to be going out in the fourth quarter maybe by September, but certainly fourth quarter. And looking to do what Thomas asked, looking to upgrade people and we'll take the other one in trade, but they’re going to have to pay a lot of cash, because that other one, we can refurbish and get it back out in the market and make some money on that too.

An inventory write-down is not something that we should be worried about?

Absolutely not.

Our next question comes from the line of Alan Stone of Wall Street Research. Please proceed with your question.

I was wondering if you could perhaps address a little bit about some of the balance sheet needs with your capital raising needs going into the second half and into next year in 2017, going forward.

Well I can't say too much there because nothing's been publicly disclosed, if there is anything. So, I think it's pretty clear, that this is a company that we live hand-to-mouth and have. Sometimes we've done it on purpose, sometimes we've done it just because the market didn't allow us to bring in more money. We'd like to not raise more money than we have to, but at the same time we need to grow this company. We have an opportunity that not a lot of CEO's have where you have an incredible staff, you have a proven instrument, you have an enormous market of -- in the billions of dollars that we believe it's at least that 7 billion or 8 billion. We have a proven technology and there's over a 100 papers written and now we have a new instrument and a deal with a subsidiary of a $60 billion company. So, we've got -- the stars are aligning, which is why we believe we're at that inflection point. So we don't want to be here and be pennywise in pound foolish. You can't win if you raise money at $0.40 let's say because that's where the stock is, or $0.43-$0.45. People are worried about the dilution, if you don't raise money they want to know how you're going to survive. Alan, you know me, you known for me eight years or so, we're going to get the money in the right way, anyway we have to if we need money, to grow this company and that's all I can say right now. And we cannot, we will not limit this growth because we don't want to dilute, it's not dilution if the end result is you make the Company more valuable.

There are no further questions in the audio portion of the conference. I would now like to turn the conference back over management for closing remarks.

I did want to say one thing. I will be in San Francisco next week. Thomas I've never met you, hopefully I'll get to meet you next week. We are a part of the MoneyShow which is a retail investor show. We've never done before -- well, we did it one time on a very small scale. I've been given a slot on the main day. This is in San Francisco which is just slightly below Boston as the hub of the universe in terms of biotechnology. I say that to my friends in biotech in San Fran because there is a running battle back and forth. But honestly it's a tremendous biotechnology market in San Fran. We will be there, we think there will be 3,000 to 4,000 investors we're told, mostly -- most of them are retail. We'll have a booth, I -- on Wednesday [ph] which is the 24th, I will be on the -- I am on the schedule to give a 10-minute talk, which is an introduction to a high powered biotech panel and also to say a couple of words about Pressure Bio and then the next day I have an opportunity to have a 45 minute workshop. So I am excited about the MoneyShow and excited about being there and if anybody on the call is from the San Francisco area or attending the MoneyShow, please stop by and say hi. So that is next week August 23rd, 24th and 25th. We're also sending Dr. Lazarev to Australia, there is a ribbon cutting in the middle of September at the Children's Medical Research Center, a lot of politicians from a lot of places will be there and we want to be there, so Alexander will be there for us and also he will then go on to Taiwan with Dr. Lawrence where the International Human Proteomic Meeting is. A very powerful meeting and there is some people speaking that are users of ours and we need to be there to support them and we need to be there because this is the first major show that’s come since we've actually commercially released the 2320EXTREME. So thanks everybody for attending, we're excited about the second half of the year. There are so many good things that have gone on and our job here is just to funnel this in and take advantage of all these opportunities and so far this year we’ve set our goals and we made them. And our major goals in the second half of the year are to continue the increase in sales over the last year. It's to commercialize and really push the commercialization of our 2320, it’s to enhance our relationship with SCIEX and have that grow in the second half of the year as it just started a few months ago. And we're going to continue to work on an up list because I can't tell you the number of people it is 90% of the investors I met want to see this company if not a 100%, but certainly 90% want to see this company back up on the big board such as NASDAQ. So we're going to continue our work with there. So good safe rest of the summer, happy birthday yesterday to my son and happy birthday to my grandson, who was born yesterday and thanks for everybody for joining and we'll talk to you in middle of November. Thank you, Tim.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful rest of your day.