Ric Schumacher – Chief Executive Officer

Daniel Wong – Investor Town Hall Bolton Flautt – Equities.com Suraj Singh – RedChip Company Alan Stone – Wall Street Research Mike Reiner – Stock Watch Index

Greetings and welcome to the Pressure BioSciences’ Third Quarter 2016 Financial Results and Business Update. At this time, all participants are in a listen-only mode. A brief 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 host Ric Schumacher.

Thank you, Stacey. And our program today is going to be – I am going to read a cautionary statement and then I am going to talk about the financial overview of the third quarter and the three quarters to-date and then we are going to open it up to questions and anyone who will have question please join-in and Stacey will let everyone know how to do that. The cautionary statement is that the following remarks that I make 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 on which such statement is based. So as I mentioned I’d like to talk briefly about the third quarter financial results. And then we’ll jump into a business update. And then we’ll take the questions. So for Q3 as we announced both in our Q that was filed and in the press release that went out today. First of all I can say that we are pleased with the financial results of the third quarter we think as I stated several times before that 2016 is a watershed year, an inflection year for us. There's so many good things that are going on, so many things that we're working on right now, that it's really quite a stressful but very exciting time for me and my team. We certainly met or exceeded several of our significant milestones. And performance improvements that I need to once again applaud the PBI team for their focus, their hard work their loyalty their dedication, it’s to me it's extraordinary. What this group of incredible people I have, have been doing. This Company has grown in the last three or four years from 40 to 50 instruments in the field to maybe over 150 maybe over 160. We have close to 300 customers who have purchased or leased instruments all of these require installations, training and warranty. We have to build the instrument, we have to quality control it, we have to find the customers and sell them on this very novel technology that we have. And all of this is being done with the phenomenal group that have been willing to take on more and more as we grow quarter-after-quarter. So I applaud their efforts. For the third quarter, we reported products and revenue, products and services revenue of over 500,000 or $500,929 for the third quarter this compared to $481,452 for the third quarter 2015. Historically the third quarter has been our strongest quarter of the year. The $481,000 from last year was a record for products and services revenue. So this year the $500,929 eclipsed that record setting new high for a quarter in revenue for products and services and it was the first time we actually broke $500,000 in just products and services not counting non-product such grant revenue. So it was just a year ago that we’re looking at $400,000 and then $500,000 for total revenue trying to eclipse that number and in the third quarter of 2016 we not only had our third consecutive $500,000 quarter but we actually broke $500,000 in product sales alone. So we’re very excited about that. The product sales revenue was driven primarily by instrument sales you recall last quarter they were driven more, we had good instrument sales but we had very large consumable sales this quarter and it was instrument sales that were driving our products and services revenue. And what’s exciting about that is as I’ve said often consumables will come, we have to get the instruments out there, we have to get our customers to using the instruments to be publishing and presenting data because they are our best sales force right now. They are pretty much the only sales force we have right now that is larger than one person, we have one person in sales and she spends half of her time in sales and half in marketing. So we have a group of users, some key opinion leaders, some not, that that love the technology and its these people who are publishing and presenting and talking about the technology who are to a great extent a reason for our increasing sales and our record sales because of what they’re doing. So it’s important to drive the installed base. It’s important, much more important in our opinion now to have more instruments out there than have fewer instruments and having more consumable sales. We believe consumable sales will come but they won’t come if we don’t drive the instrument installation. So we’re very excited that we had a record revenue for products, but we also had record revenue for installation of equipment of instruments over the quarter. As we pointed out in the numbers that we reported, our grant revenue decreased to $34,000 for the quarter from $98,882 for the same quarter in 2015. We’ve talked about this before, we were given an extension for the grants, you all will recall that we received awarded about two years ago a $1 million grant, it’s about half done and we went back to NIH and request an extension. We have a one-year extension now on this. So we expect that the work on the grant will begin to pick up. There was a number of parts that we’re very specific to the grant that had to be ordered. And there are a number of things that went into that and that sort of held the grant up for the time being. But at this point we feel that in the fourth quarter and certainly next year we expect the grant revenue is going to increase. We haven't lost that second half of the million dollar grant we've got it extended for a year and we expect to start working on the grant in earnest again, this quarter and next year and in billing it. Total revenue decreased to $535,334 from $580,334 for the same quarter in of 2015, but if you look at the decrease in grant revenue over $60,000 and you look the increase in product revenue its clear that our total revenue was adversely affected by the loss in grant revenue. However we made it up and then some by having a record quarter in products and services revenue. Our operating loss for Q3 was down $451,000 approximately $451,000 compared to approximately $690,000 for the third quarter of 2015. And we wanted to make it very clear in the statements we had out there that that this was some of this was due to a one time credit that we received from a prior professional service provider that we received several hundred thousand dollars in credit. And that came in the third quarter, so it reduced our operating income had we not received those credits, we believe our operating income would have been about the same maybe slightly larger than last year of $690,000. So it is a one time positive to the operating statement, but I want to make sure everyone understands we are still very, very finicky about what we spend. We're very careful about our expenditures and we negotiate hard, we travel smart, we try to keep our operating expenses and to a certain extent that is going to continue to help us keep our operating expenses down. Earnings per common share in 2016 third quarter was a loss of $0.03 basic and diluted as it was the same in the third quarter of 2015. Now briefly for the nine month period that ended September 30, again products and services led the way we had revenue of roughly $1.4 million compared to $1.17 million in the first nine months of 2015, this is an increase of about 22% and again the drivers there were instrument sales, which also had a record for a nine month period of over $1 million, of $1,001,060 compared to $752,444 last year for the nine month period. So we have consumables that are certainly increasing throughout the year and we have instrument sales that actually not only increase but set a record for the nine month period. So we're excited about the year not just the quarter, that finished but of course all three quarters. Grant revenue decreased as expected for the nine months, it went from $259,000 in 2015, nine months period to $127,000 approximately this year and again, as I mentioned we believe that this is a short-term decreasing grant revenue and that it will pick up this quarter and most assuredly in 2017. Our total revenue for the nine-month period wasn't actually a record revenue for nine months of $1,556,776 and this compared to $1,433,572 for the prior nine-month period. So in spite of the loss of about $130,000 in grant revenue for the nine-month period, we still managed to have a record total revenue for the nine-month period of 2016. Our operating loss for the nine-month period ended September 30 was about $2.55 million compared to $2.62 million or $2.63 million for the nine months of 2015. So our operating loss decreased over this period. Again we attribute a majority of that to the credits that we received as I mentioned before, but also to the great job that my team is doing in controlling our expenditures. The loss per common share for the first nine months of 2016 was $0.23 basic and diluted compared to $0.17 for the first nine months of 2015. Now I'd like to talk briefly about some business achievements and different programs that are ongoing and then I'll open it up for questions. So the first thing I want to talk about we've talked about this recently we've hired a new contract manufacturer. They're only about a 15-minute to 20-minute drive away from us here in Eastern Massachusetts, which makes it extremely convenient for us compared to the previous manufacturer we had which is on in the West Coast and very difficult to work with them because of the distance involved, great people, but hard to work with them. So they are ISO-certified. They are coming up to speed in our new instruments system that we announced – that we in July, that we sold the first four units at the end of June. They are coming up to speed in develop and contract and manufacturing this system very excited about the work we think to do very high quality work. And it's such a pleasure to be able to drive 15 or 20 minutes away and have a face to face meeting with our ISO certified manufacturer, when we talk about changes that need to be made or increase in our expectations or builds and things like that. So they've built four of our systems. Remember they've built five of our systems in the second quarter mostly finished in June and all five were sold they’ve built four more systems in the third quarter and all four of these systems were sold. We do not have any of our new systems in inventory, it may sound slow and it is slow. It takes time to build a quality system because we not only are building a quality machine or instrument. But we are trying to get this CE Marked. And the CE marking is very important and is required by probably three dozen different countries to be able to sell. And so we’ve been working on this, so there’s a lot of things that have to go into developing a system along quality lines that will then allow you to achieve a CE mark. So that all four that we’re built in the third quarter were sold, we have plans to build at least 10 in the fourth quarter. We have two that are built and we have two more that we were told today are ready to be picked up and we have four more that they’re going to start on next week. And so that makes eight and we think we can fit two more at the end. So five in the second quarter, four we’re manufactured in the third quarter and we’re looking for eight to 10 to be manufactured in the fourth quarter. And then we’re going to be putting in a very large order for parts, so that we can build many more per quarter in 2017. The second thing of note is that in July, our Vice President Biden was in Australia and he named the Children’s Medical Research Institute as an official collaborator with the U.S. National Cancer Institute and President Obama’s Cancer Moonshot initiative this is where the government is putting about $1 billion to work over some last year mostly this year to try to do in the next five years what they normally take 10 years in cancer research our first three instruments went to the Children’s Medical Research Institute in June of our brand new instrument the 2320EXTREME. And it is being used and will be used to screen up to 70,000 or more tumors samples as part of this Cancer Moonshot. The third is I mentioned CE Mark and we’ve made measurable progress towards that goal of achieving CE marking for our instruments prior to the end of this year. And the fourth thing of note or achievement of note in the third quarter was that we were invited along with representatives from some very good company SCIEX our co-marketing partner. CMRI, the group – the cancer research group in Australia that bought our first three instruments as well as the Institute of Molecular Systems which is run by Professor Ruedi Aebersold perhaps one of the top three experts in the world, in the area of proteins and also represented from Beckman-Coulter, Illumina and XBIO. All were asked to make presentations at a Gala Opening of the human – of the International Centre for the studies of Proteome of Human Cancer or ProCan, which is located inside the Children’s Medical Research Institute. And very excited that we were included in this group to talk about pressure cycling technology and how CMRI and ProCan will be using our system together with the SCIEX mass spectrometry system to study and look for biomarkers in over 70,000 of tumor samples. Also in the press release, there is a link to a small segment that talks about our next generation Barocycler 2320EXTREME instrument, so please if you go to the press release you can find that link or you can go to our website and that video plus many more are on our website. Briefly about the fourth quarter and going ahead, we are absolutely focused on implementing and continuing to implement a sound path towards financial self sufficiency and of course future growth and profitability. We are doing everything we can to drive the acceptance and commercialization of the new instrument 2320EXTREME it is a beautiful instrument. Quite frankly, it does things pressure is pressure, so when you hit to 20,000 PSI or 30,000 PSI, it doesn’t matter whether it’s our older system the 2320 our newest system the 2320EXTREME, got the bells and whistles on this new instrument. The previous one was run by a microprocessor this is run by a computer. The previous one didn’t allow you to download anything, this one has a USB port. So you can download a lot – the data which is very important for a lot of pharmaceutical companies and is opening up the doors for us there. It has better control of pressure, better control of temperature, it’s more rugged very excited about this new instrument. And the fact that we develop it internally along with everything else that we did over the last year and a half and it is now out being sold. The third thing to, I think to think about as shareholders in the Company, or potential shareholders in the Company is that we have a co-marketing program with SCIEX, an incredible company that is from what everything I read the leading company in the world in selling an instrument called a Mass Spectrometer to laboratories worldwide. This is the gold standard that scientists use for understanding and proteins – for reading proteins the Mass Spectrometer we find in our reading that there is about 16,000 labs in the world that have at least one Mass Spectrometer and SCIEX as a leading share of those it’s not much more than the others, but it’s still more. They are the leading provider of Mass Spectrometers. This is an instrument that can cost $400,000 to $1.5 million and our instruments sits in front of it. And we think makes the downstream instrument better because we believe that the use of pressure cycling technology gives the user a better higher quality result when they break up their tissue in their cells to free the proteins to be steady downstream. And the fourth thing to look about is to look at as we go forward is that we have said multiple times this year and we've already started to significantly expand our sales and marketing capabilities. Up till now we've gone, we have one inside, one outside sales person. And she was brought to half time sales and half time marketing. Earlier this year when we signed the co-marketing deal with SCIEX. We have Dr. Lawrence who heads up sales and marketing, but he also heads up business development, manufacturing operations and so we have very limited time from both Nat Lawrence and Roxy to spend in sales and we depend upon our customers to do a lot of sales for us. That's okay up to now, because we've been very busy building the company and building the new instrument, but it's not okay going forward and we need to start expanding our sales capabilities. So I'd say that those are the things that everyone should look at, as shareholders or potential shareholders going forward. It's been a number of achievements. I would like to rehash very quickly. The 2016 year so far because I want to remind some we have some new callers I'm sure on the phone and we just want to let them know and remind our existing callers and shareholders of some of the two or three of the major achievements of the year. First of all the co-marketing agreement SCIEX, SCIEX is a worldwide leader in providing analytical instrumentation to the life sciences field. It's a 2,700 person company, it's part of the Danaher Group. And we're working with them in a co-marketing program to introduce pressure cycling technology and our Barocycler cycle instrument and instruments to that community. We eliminated nearly $3 million in floorless debt we have no more what's called toxic debt on the balance sheet, haven't had toxic debt in balance sheet for about six months. That's all gone. The debt we have on the balance sheet is at a fixed price and has at least another year to run. So we've cleaned up our balance sheet in that respect. As I mentioned we’ve released the new instrument the 2320EXTREME. Now we've had three consecutive quarters with total revenue surpassing $500,000 and we even had this past quarter with just product sales surpassing $500,000. And as we mentioned over the past week, we closed on the sale of $610,000 of our common stock in a PIPE transaction and we two weeks ago mentioned in a press release that we opened up $2 million line-of-credit under what we think are quite good terms for the shareholders of this company. And at that Stacey, I’m going to turn it back to you and would you be kind enough to let everyone know how they might be able to ask any questions they have.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Daniel Wong with Investor Town Hall. Please proceed.

Hi Rick. I wanted to ask you mentioned the CE marking on the new Barocycler. Can you explain what that is and how long it typically takes to get something like that in process there?

CE marking Dan came out a number of years ago. And it’s a process and it’s like many things in life that are worthwhile they take quite a long time. We need to prove to independent international agencies that our instrument is made in a quality system and they will therefore inspect the manufacturing site, which could be our site. But in this case it’s our new ISO certified manufacturer that’s 15 or 20 minutes away. They check all the quality systems from buying the materials to how you put the instrument together and also how well the instrument works at the end as you let it go through quality control before you release it. CE marking is required by I believe about three dozen countries that require that the CE Mark be obtained before you can sell your instrument in that country. And many of these are European countries. So to be able to sell to a number of these countries that already have our 2320 which was CE Marked and I can tell you back when we got that instrument CE Marked about ten years ago, it took about a year, it took quite a bit a lot of money and a lot of time and we are able to get it CE Marked and once you’re CE Marked you have to go through annual reviews of your process. And so we started this – we started you can’t start so you have the instrument made, we’ve started this in the May-June time period. We set a goal that we thought was attainable that we still think is attainable to get CE marking before the end of 2016 in my opinion, that’s a very, very aggressive goal. But we know how important it is to have a good 2017. We know that our sales of our new instrument are going to be clearly dependent upon CE marking because a number of the countries outside of the U.S., Germany, UK, Poland, France, Spain et cetera will all require a CE marking. And so we set a goal and quite frankly like most things with this company we just had to fit it in. And so we did, we fit it in and we've been working on it and I can tell you that we made measurable progress and I am still optimistic that we will be able to attain the CE Mark for our new instrument before the end of this year, which again cost a lot of money and a lot of time. But if we get that which we expect we will whether we get it by the end of the year or not remains to be seen. But we need to get CE Marking and we're doing everything we can to get it and to get it before the year end.

Great, thank you for that. Are you able to start pre-selling some of these without the CE Mark?

We can sell as we already have, there are some countries, many countries that don't require a CE Mark. Some have their own mark Dan, some have their own mark some will accept a CE Mark for instance once you’re CE Marked if you’re selling to a certain country that says well we want you to go through and get this type of marking but we'll accept a CE marking and there are some that will accept the marking of other countries. So the answer is – it is something that requires you to build it in a quality system and be able to have it UL marked for electrical compliance and have it marked with for other reasons. And we're doing all of that. So we're working on it and there are some countries that are accepting it for the marking we have already. And there is some countries that quite frankly will not let it be in, until we get it truly CE Marked, which is why it's really important to get this and it's really important to try to get this before the end of the year. So we can kick off 2017 with the number of countries that today can't buy our instrument but will be able to next year hopefully starting in January.

Great, thanks for that. Congratulations in all the progress that you are looking forward to once they come here. Thanks so much.

All right Dan. Thank you.

Thank you. Our next question comes from Anthony Carlo Private Investor. Please proceed.

Hi, Ric.

Hi, Tony.

Congratulations on the wonderful achievements that the Company has made, you have made. I have a couple of questions. First on accounts receivable, I think it is a fairly material increase in accounts receivable that’ll be one question. Second question would be as our relationship with SCIEX preclude us from getting this far in distributors. It seems like there would be an important big market that we could – that we can get maybe licensing fees. My third question is a comment and a suggestion. It seems that you basically own this fleet pressure cycling concept that particular space and it's obviously the preferred technology or cell analysis and sample analysis. So what can we do as a company to convey that image and market that concept, so that indeed does become the standard of the industry came to when Xerox came out with their machine, everybody said Xerox is copy. Now we have somebody say pressure cycle this sample.

Well, Tony. Again welcome aboard. We met six months ago, five months ago. I know you're a new shareholder. And I appreciate you being on the call. Your first question was on accounts receivable. Our accounts receivable that we published went up from $113,000 at the end of December to $589,000 and obviously you saw the concomitant decrease in cash. What I can assure you is that the vast majority of our clients are just top notch clients they're universities, they are government agencies. We rarely in the last five or six years, I think I can recall one or two bad debts and they were not $8,000 or $6,000 and things like that. So the accounts receivable are from very top notch customers. We are into a cycle which we really don't like to be into, but we can't get out of it. It's not easy to get out of it. We work all quarter and then at the end of the quarter, we have a lot of sales. We'd love to have those sales in the beginning of the quarter, so that the money isn't all coming in 60 days after September 30 or so. I can tell you that a lot of that money has come in and that is very welcome to us. It's been helping us out a great deal. It certainly helped us out a great deal before the line of credit was set up just about 10 days ago I guess now. And so the AR is extremely good and it's been, it just happens that the that a lot of our sales, we had a record quarter, we had a record quarter in instruments, we had a record quarter in product sales and a lot of that happened in September, and a lot of that happened in the end of the – in the last few weeks of September, couple weeks. So that's why that number is so big. Number two you asked about distributors, there's nothing that prohibits us except time and money from getting distributors. It is not an easy, it is a daunting task in fact, when you think about this staff and all that we're doing and then to look at trying to expand and we are there are several things that you have to keep in mind. First of all, we were running out of the older instrument, we were just – and we are just developing and building. We've sold every one of the new instruments that we've built. And so there's a fine line we have to walk between trying to go out there and over sell something and not be able to produce it and not be able to have it available if someone is depending on it. And so between the cash constraints we’ve had the time constraints we’ve had building a distribution network overseas has been lower on the list than it's going to be going forward. I can assure you of that. There is nothing in any deal that we've done that keeps us from setting up a distribution network. The only commitment we have is that we treat our customers of our partner with special discounts that that we give them because they are SCIEX customers already. And so other than that we can certainly and we will, and we're going to be – I can assure you we are going to be very aggressive in 2017. When we have instruments to sell and we have consumables to sell and we have people here to support our distributors, and along those lines I can tell you that there is a distributor that we worked with in prior years and then drifted away from for two or three years called IL, a gentleman named Alexander. And Alex has built an incredible distribution network in Germany. He's now expanding throughout Europe and we've had discussions with him and I can tell you that we signed a distribution agreement with him recently. And that we are expecting a lot from Alex and his team at IL in next year not just in Germany, but they are going – they are developing networks throughout all of Europe and we're very excited about that. I can also tell you that we signed a new distribution agreement with a friend of ours in Japan all of this in the last few weeks and in Japan and so we're excited about this new agreement that we have in Japan. So that I hope that answers your second question. The third one is a good one and there is – we love people to say we need to pressure cycle this and some people are saying that but obviously not enough. We're still relatively unknown our technology Tony is still relatively unknown. We're just a small company in Boston with what I believe is an incredible technology. I've told people in my lifetime of developing technologies personally this is the most exciting – although has the most potential in any technology I personally have ever worked on. So I'm very excited about it and I'm excited about the fact that we are ending this inflection year and that we are – have been able to do some of the things that we couldn't do before which is one is to access cash. It's not a lot of cash but it's a lot more cash than we've had up to now that we've announced in the last couple of weeks. And we've been able to take care of our balance sheet and as I think you know and others know because we said it several times in writing. We have got ads out – we have an interview tomorrow for instance for a New England sales field representative. I can tell you that we've also hired a group out of Chicago that is been in the business for 20 years. They are acting like. I'm going to call them agents I'm not sure that's the right term but they are they know a lot of people in the life sciences business and they are now going to be actively calling a lot of people that we could never get to in this short term and we are paying them to spread the word and to let people know that we exist and to send out information about our systems. So there is a lot of good things that are happening right now. That will bare fruit in the coming months and certainly in 2017.

Interesting. Thank you so much.

Our next question comes from Bolton Flautt with Equities.com. Please proceed.

Hi, Mr. Schumacher. And thank you for the great presentation. And again Bolton Flautt with Equities.com. We have two forward question from our readers. The first is focuses on the variable financing you mentioned the $2 million line of credit, where you got decent interest rate and bullish priced warrants. Whether this signals to the investment community and how did you get this good financing. And the second question is that I believe that you’re starting to setup your sales and business developments efforts and I believe you mentioned this at some investor conferences. Can you elaborate on where you’re directing the sales efforts, where the opportunities are and et cetera?

Bolton nice to meet your acquaintance, I know your magazine Equities.com and it's been a staple out there for years. So welcome aboard. I don't think we've spoken before. All right, first question you've asked me was about the $2 million line of credit. I appreciate your words saying that, you saw it is a very favorable terms for shareholders and how did we get them. I would – personally I agreed with you. I've told a number of people who've called, most people called they've given me, maybe a virtual high five. We did get very good terms for – this is an unsecured line of credit. As you mentioned the warrants were priced at $0.40, when the stock's been around $0.30 and the other parts of the deal which were all in the 8K that was filed I think were very favorable to shareholders. This came from a high net worth individual, one individual who has supported us in the past understands in my opinion. How important our technology is, understands how close we are to this inflection point I believe and wanted to make sure that we're given every opportunity to get there. And I also want to thank our friends at Garden State Securities who worked with me to attain this line of credit and they deserve their own credit for helping me – helping us get this line of credit at Garden State Securities in Red Bank New Jersey. So it's terrific to get that $2 million. The second part of your question was about staff and where it's going to be focused. I think it's in the press release that went out today, we need we need staff. This is the same group of people that have been with me for four years and yet we've gone from maybe 100 instruments in the field to 275 or so. We've gone from 30 customers to maybe a 150 or 160. We've gone from very limited consumable sales to multiple sales. We've gone from having to install and train a handful of people to where we have a lot of people. So we this company is growing in this company needs staff, I'm excited to say that this company is going to be hiring staff in the coming days, weeks and we've already hired staff and will be hiring staff. And we've hired several part time people to fill gaps immediately and as I say we’re interviewing for a full time person tomorrow and we get other people that we're talking to. Where we think we're at the beginning of the next step in our growth and we're – I've done it before three times. I can smell it. I can taste it. I'm very excited about where we are. No guarantees, but the only guarantee I can make is I've never been surrounded by people that work is as hard and are talented and is focused as I have on my team right now and I think all shareholder need to know that. So we're going to be focusing on our so far low hanging fruit. Our low hanging fruit is the Mass Spectrometry market. If there are 16,000 labs, which we release there are that have at least one Mass Spectrometer and we have maybe 50 of them. That now are our customers, were quite a bit of ways to go. But to Tony's question, 10 minutes ago and a little bit to yours, these things don't happen overnight. We are changing a paradigm that's existed for decades. We are asking scientists who spend their life looking to find one small change in one bio molecule, such as one protein out of let's say 10,000 proteins in a cell. They're trying to find one small change. And we're asking them to try a whole new way of getting that cell, opening the cell, getting out that bio molecule, that protein or that lipid or that piece of DNA and to break it down to where it can be analyzed in a totally different way than they are used to be doing and their mentor did it and their mentors mentor did it. So these things don't happen overnight, but they do happen. When you have a better [indiscernible], we believe we do. It will happen. And so I know that I get phone calls from some investors who say I'm very patient. I know these things take time. I get phone calls and e-mails from others who say why is it taking so long. The fact of the matter is we think that's our best market to push. So when we hire our people as we are we're going to be hiring people with the knowledge that they're going to be leading the charge in trying to get us business primarily in the mass spectrometry market and then the two edged sword here. The other side is that our system is platform system. It can do so many things in so many areas that once we feel like we've got traction in mass spectrometry, we can look at other areas at forensics that it anti-bioterror at agriculture, aquaculture, at vaccines, many other ways where we think pressure cycling technology will also have a play. But we've got to be very focused right now and the people were hiring and they're going to be helping to develop, they are going to be helping to sell. They are going to be helping to install and train. They're going to be focused in the area of proteins primarily and in the area of helping people that are doing Mass Spectrometry have better quality by using our system

Great. Well, thank you for that Schumacher and congratulations again on a great quarter and I look forward to fourth quarter and upcoming updates and a great presentation. I really enjoyed it.

Nice to meet you Bolton.

Our next question comes from Suraj Singh from RedChip Company. Please proceed.

Hi, Mr. Schumacher, how are you?

Hi, Suraj.

Congratulations on the great quarter. I just have a quick question. The revenues what percentage of sales was it from influence from the SCIEX deal for this quarter. I mean are they – is it improving because of the SCIEX co-marketing?

Absolutely. So I think the question if I could ask it, if I could change it around is the last two quarters, the first quarter there was very little. Even though we had a very good quarter, there is very little from the SCIEX deal. Last year, there was nothing from this SCIEX deal. There were sales that were related to our relationship at the time with SCIEX. But nothing to do with the SCIEX deal and nothing of the proportion. I would say that the majority of the sales of our instruments and we sold nine of them in the first in the second and third quarter of just the 2320EXTREME. The vast majority of them were related some of them absolutely directly like Children's Medical Research Institute buying three and saying publicly we're going to do PCT swath that's combining us and the Mass Spec product line of SCIEX. So of the nine instruments that are sold and of the calls that have come in, certainly the majority of them are related to the SCIEX deal. That said I think we're at the at the tip of the iceberg because we came into the game late, as I explained to some people, the deal wasn't signed until January. SCIEX is a very large company. I believe they have 2,700 people. They have a very large sales, marketing force and by the time we got introduced to everybody in March the first time their 2016 program was well underway. So a great deal of what you see for the instrument sales was directly related to the SCIEX deal. And I think that's going to stay the same for next year. We just – our goal is just to make it much bigger.

All right, thank you. That's it from me.

Thank you. Our next question comes from Alan Stone with Wall Street Research. Please proceed.

Yes. Hi Ric, congratulations on another record quarter, consistent record quarters and couple of questions, I guess first of all on, maybe you can elaborate a little bit on the consumable revenue as you continue to build your installed base quarter-by-quarter. I guess there were some anomalies that occurred in the last couple of quarters on costs the decline of the consumable. But I would speculate that could pick up nicely as you go forward and what causes and then that they just run out of product that they need to re-order or I mean is that need to be proactively marketed on your partner to make that happen. I was just wondering if you could elaborate on that a little bit.

Good, good point you’re bringing up Alan, and hello again. We had a record quarter in consumables in the second quarter of this year. We've had almost I have to look at the numbers, but I know once in a record for three for nine months, but it's close to it. So we had a very good year for consumables. It just so happens. We've had a better year for instruments. I've mentioned this on the call several times probably more than several times. We're limited with our bandwidth. We have nine people and we are growing, this Company could double in size in the next six months. And most of those people will be focused in one way or the other in the sales and marketing capacity or in manufacturing capacity to support sales and marketing. So yes, you have to proactively sell and market consumables. But what we've done from day one and I believe it's the right course is to push the installed base, drive it hard and as much as we can, because number one if someone buys the instrument and they only use a couple of hundred dollars or $1000 of consumables. But they write a paper and they get and they present the paper and a meeting and there's five or 15 or 1,500 scientists in the audience and they see a picture of our instrument, they hear about the data that's going to help us sell more instruments. So we need to – the issue we have is we're an unknown. And that's not bad. It's not bad to think that we're doing all of this and we're really relatively unknown. And so we need to drive the installed base of instruments and that's what we're doing. And with the sales team that we have, which is half of a full time person and whatever time Dr. Lawrence can spare from his other duties – and specially now he's taken on internal manufacturing and operations. He and Roxy are all we have and half of Roxy and a very small portion of Nat. And so I asked them to push the installed base of instruments for the reason I just said plus the instruments sell for between $30,000 and $50,000 and they have a margin, gross margin that is very close to the same as the consumables. So let's push the installed base, the consumables are going to come. Number two, we don't have the people, the bandwidth to do what we should do and that's why we're hiring. We need people to pick up the phone here in Eastern Massachusetts dial for dollars all over the country and let people know what they can do and make sure they see the new publications, that came out to know they can do other things with their Barocycler that perhaps they haven't thought about. So consumables will come Alan, consumables at some point I believe dollar wise will exceed the income, the revenue of the instruments, but at this point I'm just – I'm tickled pink. I'm happy to see the instrument sales leading the way because I know every instrument that gets placed is another potential believer another potential presenter at a national, international, local regional meeting that will be for the time being, maybe our best salesperson because they are spreading the word.

Yes. Thank you. And the second question, I was looking at your balance sheet this morning and on the liability section. I know that you eliminated all the floorless convertible debt and I want to congratulate you for that again. At what point does that derivative liabilities on the balance sheet. There seems to be about $5 million of that drop off I mean, will that come off at some point because that's more of a that it's gone or what triggers that under generally accepted accounting principles. Because that would be a big boon to your balance sheet and then finally drops off because that's seems like a phantom kind of liability in my judgement.

Alan, very [indiscernible] and but its more than $4 million, it's over $10 million, because you have the same derivative liability on the warrants, as you do on the conversion option of the actual debentures. So you're right. There's no more flawless debt on there. This is all safe debt, it's all convertible at a set price. But there is a ratchet on the convertible debenture and there's a ratchet on the warrants and because there is a ratchet under GAAP. We have to book a derivative liability and that derivative liability is over $10 million, so you are looking at current liabilities of $13.5 million and I'm going to give you a rough number that $10 million of that maybe more is related to derivative liabilities. When does it go away? It goes away when the warrants are exercised, it goes away when the debenture is converted into stock. How does that happen? The holder can do it themselves or we can force it. If you go back to the 8-Ks and the 10-Ks that were filed, it will tell you that if the stock price is three times, the exercise price for 10 days in a row or 15 or 20 days, we can force convert it. But also if we did an up list to NASDAQ or New York Stock Exchange and raise a minimum of $5 million. Then we can force convert it. So there are ways that we can get rid of this liability and what a nice thing it would be wouldn't it if we could see all of this $9 million, $10 million, $11 million go away. Your words it was – its phantom, but it is – it's not cash. I can tell you that and it is going to once it gets converted, it's going on to stockholders equity. So it completely changes the balance sheet of this Company. Once we get that debt and those warrants taken care of.

Thank you, very good explanation. Appreciate that. Keep up the strong momentum looks like the share seemed very, very undervalued to me at this point. So congratulations on continued success.

Thank you, Alan. That means something to me means a lot to me coming from a guy that's been in the business for I won’t say how many years, because you probably don't want to remember how many years, but so many years and well respected by investors around the country.

Our next question comes from Mike Reiner with Stock Watch Index. Please proceed.

Yes. Hi Ric, this is Reiner I'm the analyst at Stock Watch Index. And you may remember we released our first research report in August on PBI. Glad to hear all the success of the Company and it seems like you are at a pretty critical point of the development – in the development of the Company and congratulations again to the removal of your toxic debt and many callers have already addressed a bunch of the questions or issues that I wanted to bring up. So I don't need to repeat this. But that's an important step and in regards to the question of the caller before me, yes, people have to understand that like the biggest portion of your liabilities are on non-cash. So while they show up on the balance sheet, they're really not a stress on you as a Company. So again congratulations on your success. I think it's extremely encouraging that the sales increase is based on instruments sales, because I would assume that the consumable sales come automatically after that through the methods of having a higher installed base and the other issues that you mentioned before. My question would be – again critical point for the Company 2017 could be a very exciting year for you. If you're able to increase your sales team, improve your management – increase your management team, you have a good ISO qualified manufacturer, which I assume is also helpful with your CE qualification. Are you only limited by access to working capital right now to achieve all of this or what out typically is the limitations for you to this regard now in expanding. Is there a manufacturing capacity limitation or what are your plans in that regard for 2017? How to really achieve the best possible growth for PBI?

Reiner thanks for the call. The major obstacle we've had is getting capitalized for the last three years. The reason that we couldn't go to the new ISO certified manufacturer earlier than we did. The reason that they can only make four or five systems a quarter for the first couple of quarters. Some of it is, a lot of its related to the fact that we've been so undercapitalized. We've had to watch very carefully where we spend our money. What we spend our money on. And we can't let that happen for 2017, because if you are right and Alan is right and other callers are right and I'm right in my judgement. We think 2017 has the potential to be really, really exciting year for this company in the area of growth particularly sales growth, but also infrastructure growth. So we have been handicapped quite frankly by our lack of funds. And we've run the - we been in the same places so many small companies undercapitalized companies have been in your stock is your collateral, it's your commodity and if your stock is down like ours has been, on the one hand you want to do it as little fund raising as possible because you want to minimize the illusion to the company. On the other hand you have to look at the cost, at the opportunity cost of not selling stock even at these low prices in order to bring in cash to grow the Company. So these are the things that keep me up at night as you might imagine. All of that's changed in the last couple of weeks. Not permanently and not to a great extent, but to a certain extent all of that's changed. We were able to secure some money through a through a Reg-D exempt PIPE and we've also been able to secure a $2 million line of credit. And what this means to us is that, first of all last week and the week before I didn't travel. Those are the first two back to back weeks. I can recall this year 2016 that I didn't have to travel. This week I only traveled a single day to New York. So there's three weeks of the single day trip to New York. The ability now to focus on the business to look at hiring people, to look at the infrastructure growth that we need because we have the cash is great for this company. It's going to be I think very rewarding for our shareholders. So the line of credit and the initial cash came in on the PIPE have been very beneficial to us to give us the ability now to fill the gaps that have grown to be caverns at this point. They are so big. But my guys are just dedicated to this and just doing everything they can to do what we can to grow the company and now we're going to be able to bring the extra people in here to expand our bandwidth to take care of the opportunities that are there in front of us that we haven't been able to do. As an example one might look and say, how much product I've already talked about building another 10 or 12 instruments in the fourth quarter, eight to ten in the fourth quarter and maybe a couple more in January. The next question is what are you going to build in February and March, and we're going to build a lot of instruments now but I can tell you that because we now have the cash. We're talking about several hundred thousand dollars that's required to buy the parts to build the instruments. And if you don't have that money, you can't build the instruments and if you don’t have the instruments, you can’t increase your sales. So at this point having a line of credit and having the initial money that came in on the PIPE, we're able now and we're putting together purchase orders to buy a lot, not to buy enough for 10 or 12 instruments, but to buy for 25 maybe even more than 25 instruments, because some of these are two and one and two and two and a half month lead times. So we need to order them now, if we want to be able to build the instruments in February to affect our sales before the end of March. So it's been really a godsend to be able to have this, this cash that comes in. So I'd say honestly, the technologies in the hands of 150, 160 clients, it's been published and over a 100 journals. We have almost 300 instruments in the field. We believe that technology has been proven. We believe the instrument has been proven to work. We believe that the market is there. We believe we've proven all this. What we lack is the bandwidth to grow this Company. And now recently in the last two weeks with the advent of the financings that we've done on very, very favorable terms to shareholders. Nothing was done under $0.40 a share and the stocks at $0.30 share, because of that we can grow our bandwidth. And therefore, we believe have a better chance to grow this company in 2017.

Yes, sounds exciting, because you're absolutely right. Opportunity cost is really important and it seems you are at a point where more working capital will allow you to reach your goals faster and that's always exciting. There might be – may be time for an update of the research report I'll try and coordinate that was small cap [indiscernible] in New York and hopefully we’ll make the market realize the real value of your stock, which should then make it easier for you to really achieve your goals and congratulations again.

Thank you very much.

There are no further questions. I would like to turn the floor back over to Ric Schumacher for closing comments.

Thank you, Stacey, and thanks to everybody. From what I understand, we not only had several records that fell a new record set for our financials. But I think we've had a record for the number of people on this call and I know we've set a record for the number of questions on the call. So and I'm going to look at that is a proxy to tell me that the excitement is brewing and that the interest in the company is growing just from the large number of people that have joined the call and the number of questions. So I appreciate everybody taking the time and I will remind shareholders that the definitive proxy was filed on Monday and it's available online. And that there are some very important votes that are in the definitive proxy, Karen Smith from advantage proxy has been hired for the third year to help us get in touch with shareholders. So the shareholders that are listening please be aware that the proxy itself will arrive at your doorstep probably right after Thanksgiving, but it's available now online. And that there's some very important votes that we need that we think will help us grow this Company next year. So I appreciate all of you are listening to us and what we're requesting in the votes and listening to Karen when she calls. And thanks again and I look forward to talking to everybody. Happy holidays because we won't be on this call again until March. But when we do or April when we do hopefully we'll be talking about a very successful end of the year and a very successful beginning of 2017. Take care everyone.

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.