**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
  **Form
        10-QSB/A**
  **(Mark
        One)**
  ý  **Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
        Act
        of 1934**
  **For
        the quarterly period ended September 30, 2005 or**
  o  **Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
        Act
        of 1934**
  **For
        the transition period from
                       
to**
  **Commission
        file number   0-21615**
 
 **PRESSURE
        BIOSCIENCES, INC.**
 (Exact
        Name of Small Business Issuer as Specified in its Charter)


**Massachusetts**
            
            **04-2652826**(State
                or Other Jurisdiction of
            
            (I.R.S.
                EmployerIncorporation
                or Organization)
            
            Identification
                No.)**321
                Manley St.****West
                Bridgewater, Massachusetts**
            
            **02379-1040**(Address
                of Principal Executive Offices)
            
            (Zip
                Code)




**(508)
      580-1818**


(Issuer’s
      telephone number, including area code




Check
      whether the Issuer: (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or for such shorter period that the registrant was required to file such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days.




ý Yes o No




Indicate
      by check mark whether the registrant is a shell company (as defined in Exchange
      Act Rule 12b-2).




o Yes ý No




The
      number of shares outstanding of the Issuer’s common stock as of November 8, 2005
      was 2,424,189 **.**




Transitional
      Small Business Disclosure Format (check one):




o Yes ý No







TABLE
        OF
        CONTENTS
 PART
                    IItem
                    1.
                Financial
                    StatementsConsolidated
                    Balance Sheets as of September 30, 2005 (Unaudited) and as of
                    December 31,
                    2004
                4Consolidated
                    Statements of Operation for the Three Months and Nine Months
                    Ended
                    September 30, 2005 and 2004 (Unaudited)
                5Consolidated
                    Statements of Comprehensive Income for the Three Months and Nine
                    Months
                    Ended September 30, 2005 and 2004 (Unaudited)
                6Consolidated
                    Statements of Cash Flows for the Nine Months Ended September
                    30, 2005 and
                    2004 (Unaudited)
                7Notes
                    to Consolidated Financial Statements as of September 30, 2005
                    (Unaudited)
                8Item
                    2.
                Management’s
                    Discussion and Analysis or Plan of Operation
                19Item
                    3.
                Controls
                    and Procedures
                29PART
                    IIItem
                    1.
                Legal
                    Proceedings
                30Item
                    2.
                Unregistered
                    Sales of Equity Securities and Use of Proceeds
                30Item
                    3.
                Defaults
                    Upon Senior Securities
                30Item
                    4.
                Submission
                    of Matters to a Vote of Security Holders
                30Item
                    5.
                Other
                    Information
                30Item
                    6.
                Exhibits
                30
  2


**INTRODUCTORY
                NOTE**





In
      connection with the preparation of our Quarterly Report on Form 10-QSB for
      the
      quarter ended March 31, 2006, we completed an internal review of the tax
      liability associated with the 2004 sale of assets and certain liabilities of
      our
      former core businesses, referred to herein as the BBI Core Businesses, to
      SeraCare Life Sciences, Inc. As a result of this review, we concluded that
      the
      tax liability related to discontinued operations recorded in the third quarter
      of 2005 was understated by approximately $220,000. We also determined that
      the
      deferred tax liability related to our investment in Panacos Pharmaceuticals
      (“Panacos”) was overstated by approximately $123,000 as of September 30, 2005.





As
      a
      result of the tax review, on May 17, 2006 our senior management and the Audit
      Committee of the Board of Directors concluded that our consolidated financial
      statements for the year ended December 31, 2005 and for the quarter ended
      September 30, 2005 should no longer be relied upon, and decided to restate
      our
      financial statements for the year ended December 31, 2005 and to restate our
      financial statements for the quarter ended September 30, 2005. Our management
      and Audit Committee discussed this with Weinberg & Company, P.A., our
      independent registered public accounting firm. On May 22, 2006, we filed our
      Form 10-QSB for the quarter ended March 31, 2006 and our Form 10-KSB/A for
      the
      year ended December 31, 2006. This Form 10-QSB/A for the nine months ended
      September 30, 2005 should be read in conjunction with those documents.





As
      a
      result of the restatement, we have amended the following items of this Quarterly
      Report on Form 10-QSB for the nine months ended September 30, 2005:




·
            Part
                I, Item 1, Financial Statements, has been amended to reflect the
                adjustment of our accounting for income taxes. Adjustments made impact
                the
                Consolidated Statements of Operations, Consolidated Balance Sheet,
                Consolidated Statements of Comprehensive Income, Consolidated Statements
                of Cash Flows and Note 1 “Basis of Presentation and Summary of Significant
                Accounting Policies”, and Note 2 “Recent Accounting
                Standards”.




·
            Part
                I, Item 2, Management’s Discussion and Analysis or Plan of Operation, has
                been amended to:o
            reflect
                our explanation of the reduction of “Gain on Sale of Net Assets Related to
                Discontinued Operations”, relative to the establishment of a deferred tax
                liability for the future taxable income under the installment sale
                treatment for federal income tax purposes, for the three months and
                nine
                months ended September 30, 2005;o
            reflect
                our explanation of the reduction of “Net Income”, relative to the
                establishment of a deferred tax liability for the future taxable
                income
                under the installment sale treatment for federal income tax purposes,
                for
                the three months and nine months ended September 30,
                2005;o
            reflect
                our explanation of the decrease in working capital within the section
                “Liquidity and Financial Condition”, to account for the current nature of
                the deferred tax liability related to the installment sale treatment
                on
                the sale of BBI Core Businesses;o
            revise
                our disclosure of “Recent Accounting Pronouncements”, to explain our
                adoption of SFAS 154, relative to the correction of the errors we
                found in
                our accounting for income taxes.





We
      have
      also revised Part I, Item 3, Controls and Procedures, to reflect the conclusion
      of our Chief Executive Officer and our Chief Financial Officer that our
      disclosure controls and procedures were not effective as of September 30, 2005.
      Mr. Richard T. Schumacher, our President and Chief Executive Officer, and our
      Vice President of Finance and Chief Financial Officer, Edward H. Myles, who was
      appointed on April 3, 2006, have included new certifications under Sections
      302
      and 906 of the Sarbanes-Oxley Act of 2002, which are filed with this Form
      10-QSB/A as Exhibits 31.1, 31.2, 32.1 and 32.2.


3


**Part
      I. Financial Information**




**Item
      1. Financial Statements**





**PRESSURE
      BIOSCIENCES, INC., AND SUBSIDIARIES**


**(FORMERLY
      BOSTON BIOMEDICA, INC. AND SUBSIDIARIES)**


**CONSOLIDATED
      BALANCE SHEETS**


September
                  30, 2005
              
              December
                  31, 2004ASSETS
              
              (restated)
              
              (audited)CURRENT
                  ASSETS:Cash
                  and cash equivalents
              
              $
              6,090,097
              
              $
              21,201,790Restricted
                  cash
              
              
              163,296
              
              
              29,816Accounts
                  receivable, less allowance of $115,908 and $205,000
              
              
              9,666
              
              
              213,532Inventories,
                  net
              
              
              343,948
              
              
              157,817Investments
                  in marketable securities
              
              
              1,766
              
              
              3,553Escrow
                  deposit related to sale of assets to SeraCare
              
              
              1,108,486
              
              
              -Prepaid
                  income taxes
              
              
              189,253
              
              
              -Income
                  tax receivable
              
              
              122,666
              
              
              -Prepaid
                  expenses, deposits, and other current assets
              
              
              83,387
              
              
              161,028Total
                  current assets
              
              
              8,112,565
              
              
              21,767,536Property
                  and equipment, net
              
              
              60,019
              
              
              19,793OTHER
                  ASSETS:Intangible
                  assets, net
              
              
              437,712
              
              
              474,188Assets
                  transferred under contractual arrangements
              
              
              1,387,531
              
              
              1,319,997Escrow
                  deposit related to sale of assets to SeraCare
              
              
              -
              
              
              1,096,756Investments
                  in marketable securities
              
              
              6,661,517
              
              
              9,178Total
                  other assets
              
              
              8,486,760
              
              
              2,900,119TOTAL
                  ASSETS
              
              $
              16,659,344
              
              $
              24,687,448LIABILITIES
                  AND STOCKHOLDERS' EQUITYCURRENT
                  LIABILITIES:Accounts
                  payable
              
              $
              77,430
              
              $
              41,272Accrued
                  employee compensation
              
              
              71,633
              
              
              86,525Other
                  accrued expenses
              
              
              139,069
              
              
              305,038Income
                  taxes payable
              
              
              -
              
              
              175,011Current
                  deferred tax liability
              
              
              219,949
              
              
              -Accrued
                  SeraCare liabilities
              
              
              251,669
              
              
              46,259Liabilities
                  from discontinued operations
              
              
              54,888
              
              
              108,049Total
                  current liabilities
              
              
              814,638
              
              
              762,154LONG
                  TERM LIABILITIESLiabilities
                  from discontinued operations
              
              
              34,000
              
              
              34,000Deferred
                  tax liability
              
              
              2,452,590
              
              
              -Liabilities
                  transferred under contractual arrangements
              
              
              1,057,437
              
              
              499,148Total
                  long term liabilities
              
              
              3,544,027
              
              
              533,148Total
                  Liabilities
              
              
              4,358,665
              
              
              1,295,302COMMITMENTS
                  AND CONTINGENCIESSTOCKHOLDERS'
                  EQUITY:Common
                    stock, $.01 par value; 20,000,000 shares authorized, 2,424,189
                    issued and outstanding
              
              
              24,242
              
              
              68,729Additional
                  paid-in capital
              
              
              6,027,020
              
              
              22,286,395Loan
                  receivable from Director / CEO
              
              
              (1,000,000
              )
              
              (1,134,262
              )Accumulated
                  other comprehensive income, net of tax
              
              
              4,202,772
              
              
              -Retained
                  earnings
              
              
              3,046,645
              
              
              2,171,284Total
                  stockholders' equity
              
              
              12,300,679
              
              
              23,392,146TOTAL
                  LIABILITIES & STOCKHOLDERS' EQUITY
              
              $
              16,659,344
              
              $
              24,687,448
  The
        accompanying notes are an integral part of these consolidated financial
        statements
 4
 
 **PRESSURE
        BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
        BOSTON BIOMEDICA, INC. AND SUBSIDIARIES)**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(UNAUDITED)**
 
 Three
                  Months Ended
              
              Nine
                  Months EndedSeptember
                  30,
              
              September
                  30,2005
              
              2004
              
              2005
              
              2004(restated)
              
              
              
              (restated)REVENUE:PCT
                  Products, services, other
              
              $
              11,742
              
              $
              2,383
              
              $
              21,984
              
              $
              12,939Grant
                  Revenues
              
              
              -
              
              
              66,518
              
              
              -
              
              
              292,054Total
                  revenue
              
              
              11,742
              
              
              68,901
              
              
              21,984
              
              
              304,993COSTS
                  AND EXPENSES:Cost
                  of PCT products & services
              
              
              33,966
              
              
              20,654
              
              
              61,653
              
              
              55,673Research
                  and development
              
              
              156,529
              
              
              239,315
              
              
              374,147
              
              
              672,087Selling
                  and marketing
              
              
              39,954
              
              
              12,278
              
              
              93,590
              
              
              138,158General
                  and administrative
              
              
              320,195
              
              
              140,597
              
              
              1,361,157
              
              
              762,597Stock
                  based compensation
              
              
              -
              
              
              281,737
              
              
              -
              
              
              281,737Total
                  operating costs and expenses
              
              
              550,644
              
              
              694,581
              
              
              1,890,547
              
              
              1,910,252Operating
                  loss from continuing operations
              
              
              (538,902
              )
              
              (625,680
              )
              
              (1,868,563
              )
              
              (1,605,259
              )OTHER
                  INCOME (EXPENSE):Realized
                  gain on securities held for sale
              
              
              2,838,491
              
              
              -
              
              
              2,838,491
              
              
              -Other
                  operating (charges), net
              
              
              (140,648
              )
              
              (30,612
              )
              
              (528,285
              )
              
              (333,607
              )Interest
                  income
              
              
              62,699
              
              
              11,705
              
              
              187,559
              
              
              15,243Interest
                  expense
              
              
              -
              
              
              (18,483
              )
              
              -
              
              
              (69,453
              )Total
                  other income (expense)
              
              
              2,760,542
              
              
              (37,390
              )
              
              2,497,765
              
              
              (387,817
              )Income
                  (loss) from continuing operations before income taxes
              
              
              2,221,640
              
              
              (663,070
              )
              
              629,202
              
              
              (1,993,076
              )Income
                  tax (provision) benefit from continuing operations
              
              
              (912,671
              )
              
              -
              
              
              (457,535
              )
              
              244,036Income
                  (loss) from continuing operations
              
              
              1,308,969
              
              
              (663,070
              )
              
              171,667
              
              
              (1,749,040
              )Discontinued
                  operations:(Loss)
                    / income from discontinued operations (net of income tax benefit
                    of $1,720
                    and provision of $913 for the three and nine months ended September
                    30,
                    2005, and benefit of $79,281 and provision of $165,851 for the
                    three and
                    nine months ended September 30, 2004)
              
              
              (3,340
              )
              
              (440,212
              )
              
              1,995
              
              
              140,946Gain
                    on sale of net assets related to discontinued operations (includes
                    effect
                    of income taxes of $701,699 in 2005, and net of income taxes
                    accrued of
                    $3,925,200 in 2004)
              
              
              701,699
              
              
              15,868,025
              
              
              701,699
              
              
              15,868,025Net
                  income from discontinued operations
              
              
              698,359
              
              
              15,427,813
              
              
              703,694
              
              
              16,008,971Net
                  income
              
              $
              2,007,328
              
              $
              14,764,743
              
              $
              875,361
              
              $
              14,259,931Income
                  / (loss) per share from continuing operations - basic
              
              $
              0.54
              
              $
              (0.10
              )
              $
              0.05
              
              $
              (0.26
              )Income
                  per share from discontinued - basic
              
              $
              0.29
              
              $
              2.25
              
              $
              0.23
              
              $
              2.34Net
                  income per share, basic
              
              $
              0.83
              
              $
              2.15
              
              $
              0.28
              
              $
              2.08Income
                  / (loss) per share from continuing operations - diluted
              
              $
              0.52
              
              $
              (0.10
              )
              $
              0.05
              
              $
              (0.26
              )Income
                  per share from discontinued - diluted
              
              $
              0.27
              
              $
              2.25
              
              $
              0.22
              
              $
              2.34Net
                  income per share, diluted
              
              $
              0.79
              
              $
              2.15
              
              $
              0.27
              
              $
              2.08Weighted
                  average number of shares used to calculatebasic
                  per share (loss) / income
              
              
              2,424,189
              
              
              6,824,075
              
              
              3,157,495
              
              
              6,843,329Weighted
                  average number of shares used to calculate
              
              
              2,537,987
              
              
              6,824,075
              
              
              3,202,101
              
              
              6,843,329diluted
                  per share (loss) / income
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements
  5
 
 **PRESSURE
        BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
        BOSTON BIOMEDICA, INC. AND SUBSIDIARIES)**
 **CONSOLIDATED
        STATEMENTS OF COMPREHENSIVE INCOME**
 **(UNAUDITED** )
 
 Three
                  Months Ended
              
              Nine
                  Months EndedSeptember
                  30,
              
              September
                  30,Other
                  Comprehensive Income:
              
              2005
              
              2004
              
              2005
              
              2004(restated)
              
              
              
              (restated)Net
                  income
              
              $
              2,007,328
              
              $
              14,764,743
              
              $
              875,361
              
              $
              14,259,931Unrealized
                  gain on marketable securities
              
              
              1,194,772
              
              
              -
              
              
              6,655,362
              
              
              -Less:
                  Income tax related to items of other comprehensive income
              
              
              (488,842
              )
              
              -
              
              
              (2,452,590
              )
              
              -Total
                  other comprehensive income, net of taxes
              
              
              705,930
              
              
              -
              
              
              4,202,772
              
              
              -Comprehensive
                  income
              
              $
              2,713,258
              
              $
              14,764,743
              
              $
              5,078,133
              
              $
              14,259,931
  The
        accompanying notes are an integral part of these consolidated financial
        statements
  6
 
 **PRESSURE
        BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
        BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(UNAUDITED)**
 2005
              
              2004CASH
                  FLOWS FROM OPERATING ACTIVITIES:
              
              (restated)Net
                  income
              
              $
              875,361
              
              $
              14,259,931Less
                  income from discontinued operations
              
              
              703,694
              
              
              16,008,971Income
                  (loss) from continuing operations
              
              
              171,667
              
              
              (1,749,040
              )Adjustments
                  to reconcile income (loss) from continuing operations to net
                  cashused
                  in operating activities :Depreciation
                  and amortization
              
              
              61,248
              
              
              115,202Stock
                  based compensation
              
              
              -
              
              
              281,737Provision
                  for doubtful accounts
              
              
              -
              
              
              250Realized
                  gain on sale of marketable securities
              
              
              (2,838,491
              )
              
              -Interest
                  received (accrued) on loan outstanding from Director / CEO
              
              
              134,263
              
              
              -Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              203,866
              
              
              (8,629
              )Inventories
              
              
              (186,131
              )
              
              35,783Investments
                  in marketable securities
              
              
              1,787
              
              
              3,243Income
                  tax receivable
              
              
              (122,666
              )
              
              -Prepaid
                  income taxes
              
              
              (189,253
              )
              
              -Escrow
                  deposits and deferred costs
              
              
              (11,729
              )
              
              -Prepaid
                  expenses and other current assets
              
              
              77,642
              
              
              34,869Assets
                  and liabilities transferred under contractual obligations,
                  (net)
              
              
              490,755
              
              
              (8,095
              )Other
                  accrued expenses
              
              
              (165,969
              )
              
              306,364Income
                  tax payable
              
              
              (175,011
              )
              
              -Accounts
                  payable
              
              
              36,158
              
              
              (113,568
              )Accrued
                  employee compensation
              
              
              (14,892
              )
              
              21,505Accrued
                  expenses due to SeraCare
              
              
              205,410
              
              
              -Deferred
                  tax liability
              
              
              -
              
              
              (100,364
              )Net
                  cash used in operating activities
              
              
              (2,321,346
              )
              
              (1,180,743
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Payments
                  for additions to property and equipment
              
              
              (64,998
              )
              
              -Proceeds
                  from sale of marketable securities
              
              
              2,841,510
              
              
              -Net
                  cash provided by investing activities
              
              
              2,776,512
              
              
              -CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from issuance of common stock
              
              
              -
              
              
              86,905Use
                  of funds in repurchase of common stock & warrants
              
              
              (16,303,862
              )
              
              -Escrow
                  deposits related to sale of assets SeraCare
              
              
              -
              
              
              (2,503,632
              )Restricted
                  cash due to SeraCare
              
              
              (133,480
              )
              
              -Net
                  cash used in financing activities
              
              
              (16,437,342
              )
              
              (2,416,727
              )CASH
                  FLOW FROM DISCONTINUED OPERATIONS:Investing
                  cash flows, net of taxes
              
              
              870,483
              
              
              28,225,626Net
                  cash provided from discontinued operations
              
              
              870,483
              
              
              28,225,626INCREASE
                  ( DECREASE) IN CASH AND CASH EQUIVALENTS:
              
              
              (15,111,693
              )
              
              24,628,156Cash
                  and cash equivalents, beginning of period
              
              
              21,201,790
              
              
              967,185Cash
                  and cash equivalents, end of period
              
              $
              6,090,097
              
              $
              25,595,341SUPPLEMENTAL
                  INFORMATION:Income
                  Taxes Paid
              
              $
              -
              
              $
              -Interest
                  Paid
              
              $
              -
              
              $
              -
  The
        accompanying notes are an integral part of these consolidated financial
        statements
  7


**PRESSURE
        BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
        BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF SEPTEMBER 30, 2005**


**(1)****Basis
      of Presentation and Summary of Significant Accounting
      Policies**




*Overview*




The
      accompanying unaudited consolidated financial statements include the accounts
      of
      Pressure BioSciences Inc. (formerly Boston Biomedica Inc. and referred
      to herein as the “Company”, “Pressure BioSciences” or “PBI”), and its
      wholly-owned subsidiaries, PBI Biotech Research Laboratories, Inc.
      (formerly known as BBI Biotech Research Laboratories, Inc. and referred to
      herein as “PBI Biotech” or “BBI Biotech”), PBI Source Scientific, Inc.
      (formerly known as BBI Source Scientific, Inc. and referred to herein as
“PBI Source” or “BBI Source”), and PBI BioSeq, Inc. (formerly known as BBI
      BioSeq, Inc. and referred to herein as “PBI BioSeq” or “BBI
      BioSeq”).




The
      accompanying unaudited consolidated financial statements of Pressure BioSciences
      have been prepared in accordance with generally accepted accounting principles
      for interim financial information and with the instructions to Form 10-QSB.
      Accordingly, they do not include all of the information and footnotes required
      by generally accepted accounting principles for complete financial statements.
      In the opinion of management, all adjustments (consisting of only normal
      recurring adjustments) considered necessary for a fair presentation have been
      included. Operating results for the three and nine months ended September 30,
      2005 are not necessarily indicative of the results that may be expected for
      the
      year ending December 31, 2005. For further information, refer to the audited
      consolidated financial statements and footnotes thereto included in the
      Company’s Annual Report on Form 10-KSB (the “Form 10-KSB”) for the fiscal year
      ended December 31, 2004.




Effective
      September 14, 2004, pursuant to an Asset Purchase Agreement dated April 16,
      2004, as amended (the “Asset Purchase Agreement”) between the Company, PBI
      Biotech Research Laboratories, Inc., and SeraCare Life Sciences, Inc.
      (“SeraCare”), the Company completed the sale of substantially all of the assets
      and selected liabilities of its PBI Diagnostics and PBI Biotech divisions to
      SeraCare (the “Asset Sale”).  In connection with the Asset Sale, the
      Company changed its legal name from Boston Biomedica, Inc. to Pressure
      BioSciences, Inc. effective September 14, 2004.  The accompanying unaudited
      consolidated financial statements have been reclassified to report the results
      of operations for the PBI Diagnostics and PBI Biotech divisions (also referred
      to as “business units”) as discontinued operations.




In
      June 2004, PBI Source Scientific, Inc. transferred certain of its
      assets and liabilities to a newly formed limited liability company known as
      Source Scientific, LLC. At the time of the transfer, PBI Source
      Scientific, Inc. owned 100% of the ownership interests of Source
      Scientific, LLC. PBI Source Scientific, Inc. subsequently sold 70% of its
      ownership interests of Source Scientific, LLC to Mr. Richard Henson and
      Mr. Bruce A. Sargeant pursuant to a purchase agreement (the “Source
      Scientific Agreement”). As a result of the sale of 70% of PBI Source’s ownership
      interests, Mr. Henson and Mr. Sargeant each own 35% and PBI Source
      owns the remaining 30% of Source Scientific, LLC.  Under the Source
      Scientific Agreement, the Company received notes receivable in the aggregate
      amount of $900,000 (the “Notes”) payable at the end of three years bearing 8%
      interest. Despite the Company’s intent to exit the laboratory instrumentation
      business, the Company may be viewed as having a continuing involvement in the
      business of Source Scientific, LLC due to the fact that the Company has the
      right to designate one or potentially three members of the Board of Managers
      of
      Source Scientific, LLC. Because of this factor, even though the transaction
      is
      treated as a divestiture for legal purposes, the Company has not recognized
      the
      transaction as a divestiture for accounting purposes in accordance with
      Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”)
      Topic 5E, *Accounting
      for Divestiture of a Subsidiary or Other Business Operation* . In
      accordance with SAB Topic 5E, the Company has recorded the assets and
      liabilities associated with the Source Scientific, LLC operation on the
      Company’s unaudited consolidated balance sheet as of September 30, 2005 under
      the captions “Assets transferred under contractual arrangements” and
“Liabilities transferred under contractual arrangements” and has recorded a
      charge to income under the caption “Other operating (charges), net” in the
      Company’s unaudited consolidated statement of operations for the three and nine
      months ended September 30, 2005 and 2004 equal to the amount of the loss
      attributable to the business of Source Scientific LLC for the respective periods
      presented. In accordance with SAB Topic 5E, the Company will continue this
      accounting treatment until circumstances have changed or until the net assets
      of
      the Source Scientific, LLC business have been written down to zero (or a net
      liability is recognized in accordance with U.S. Generally Accepted Accounting
      Principles (“GAAP”)).





8


**PRESSURE
        BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
        BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF SEPTEMBER 30, 2005**
  As
        a
        result of the above transactions, the unaudited consolidated financial
        statements included herein, and the accompanying notes to such consolidated
        financial statements, report the results of the Company’s remaining operations,
        which consist of all pressure cycling technology ( PCT) related activities,
        including the PCT related activities of PBI Source, PBI BioSeq, and the portion
        of corporate activities directly associated with the Company’s remaining
        corporate functions including costs associated with being a public
        company.  As described above, operating results of PBI Source, excluding
        any PCT related activities, together with Source Scientific, LLC are reported
        as
“Other operating charges, net” hereunder. The operating results of the Company’s
        PBI Diagnostics and PBI Biotech divisions, together with the results of the
        discontinued operations of the Company’s clinical laboratory testing services
        segment (sold in February 2001) are reported as “Discontinued Operations”
hereunder.   Certain amounts included in the prior period’s financial
        statements have been reclassified to conform to the current period’s
        presentation.  All significant intercompany accounts and transactions have
        been eliminated in consolidation.
  *Use
        of Estimates*
  To
        prepare the unaudited consolidated financial statements in conformity with
        accounting principles generally accepted in the United States, management
        is
        required to make significant estimates and assumptions that affect the reported
        amounts of assets and liabilities and disclosure of contingent assets and
        liabilities at the date of the unaudited consolidated financial statements
        and
        the reported amounts of revenues and expenses during the reporting period.
        In
        addition, significant estimates were made in estimating future cash flows
        to
        quantify impairment of assets, in estimates regarding the realizability of
        loans
        (plus accrued interest) made to a director/Chief Executive Officer including
        sufficiency of collateral, deferred tax assets, the net realizable value
        of the
        Company’s inventory, as well as an estimate for remaining liabilities associated
        with discontinued operations. **** On an
        on-going basis, the Company evaluates its estimates.  The Company bases its
        estimates on historical experience and on various other assumptions that
        are
        believed to be reasonable under the circumstances, the results of which form
        the
        basis for making judgments about the carrying values of assets and liabilities
        that are not readily apparent from other sources. Actual results could differ
        from the estimates and assumptions used by management.
  *Cash
        and Cash Equivalents*
  As
        of
        September 30, 2005, the Company had $6,090,097 invested in US Treasury money
        market funds and certificates of deposits which were in increments of less
        than
        $100,000 and insured under the FDIC.
  The
        Company’s policy is to invest available cash in short-term, investment grade,
        interest-bearing obligations, including money market funds and certificates
        of
        deposit.  Investments purchased with initial maturities of three months or
        less are valued at cost plus accrued interest, which approximates fair market
        value.
  The
        Company’s restricted cash of $163,296 consisted of payments from customers of
        its former business units who inadvertently remitted payments to the Company
        in
        error. The cash is deposited in the Company’s lockbox system, analyzed, and
        where appropriate, remitted to SeraCare in a timely fashion. The balances
        reflected are those affected by timing of funds transferred to SeraCare.
        At the
        time the cash is classified as restricted, a corresponding liability is
        established to have no effect on net assets of the Company.
  *Investment
        in Marketable Securities*
  The
        Company’s investment in marketable securities reflects its holdings of common
        stock of Panacos Pharmaceuticals Inc. (formerly V.I. Technologies (“Vitex”)), a
        publicly traded company listed on the Nasdaq National Market.  The Company
        held shares in Panacos Pharmaceuticals Inc. (Panacos), a private company
        prior
        to its merger with Vitex in March 2005, and this investment was reflected
        on a
        cost basis as presented on the December 31, 2004 financial statements.  As
        a result of Vitex’s merger with Panacos Pharmaceuticals in March 2005, and the
        Company’s subsequent receipt of shares of Vitex common stock in exchange for all
        of its shares of Panacos, the Company’s investment commencing with the first
        quarter of fiscal 2005 has been accounted for under SFAS 115 “Accounting for
        Certain Investments in Debt and Equity Securities”, as available for sale. At
        September 30, 2005 the fair value of the Company’s remaining shares of Panacos
        common stock was approximately $6.7 million based on the closing price of
        $9.74
        per share of Panacos common stock as reported on the Nasdaq National Market
        on
        September 30, 2005 (See Note 11).
  *Stock-Based
        Compensation*
 9
  **PRESSURE
          BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
          BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF SEPTEMBER 30, 2005**
 The
          Company has elected to follow Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees” (APB 25) and related
          interpretations in accounting for its employee stock options. Under APB 25,
          the intrinsic value method is used to account for stock options granted
          to
          employees. The Company has adopted the disclosure-only provisions of Statement
          of Financial Accounting Standards No. 123, “Accounting for Stock-Based
          Compensation” (SFAS 123).
  As
        the
        Company accounts for its plans under the recognition and measurement principles
        of APB 25, “Accounting for Stock Issued to Employees,” and related
        interpretations, no compensation cost has been recognized under SFAS 123
        because
        the exercise price of employee stock options equals the market price of the
        underlying stock on the date of grant, no compensation expense is
        recorded.  SFAS 123 was amended by SFAS 148 “Accounting for Stock-Based
        Compensation- Transition and Disclosure”, which requires companies to disclose
        in interim financial statements the pro forma effect on net income per common
        share of the estimated fair market value of stock options or warrants issued
        to
        employees. Had compensation cost for awards under those plans been determined
        based on the grant date fair values, consistent with the method required
        under
        SFAS 123, the Company’s net income and net income per share would have been
        impacted by the pro forma amounts indicated below:
  Three
                  Months Ended
              
              Nine
                  Months EndedSeptember
                  30,
              
              September
                  30,2005
              
              2004
              
              2005
              
              2004Net
                  income - as reported
              
              $
              2,007,328
              
              $
              14,764,743
              
              $
              875,361
              
              $
              14,259,931Add
                  back: Stock-based compensationin
                  net income, as reported
              
              
              -
              
              
              281,737
              
              
              -
              
              
              281,737Deduct:
                  Stock-based employee compensationexpense
                  determined under fair value based methodfor
                  all awards, net of related tax effects
              
              
              (29,785
              )
              
              (281,994
              )
              
              (117,293
              )
              
              (355,996
              )Net
                  Income - pro forma
              
              $
              1,977,543
              
              $
              14,764,486
              
              $
              758,068
              
              $
              14,185,672Basic
                  net income per share - as reported
              
              $
              0.83
              
              $
              2.15
              
              $
              0.28
              
              $
              2.08Basic
                  net income per share - pro forma
              
              $
              0.82
              
              $
              2.15
              
              $
              0.24
              
              $
              2.07Diluted
                  net income per share - as reported
              
              $
              0.79
              
              $
              2.15
              
              $
              0.27
              
              $
              2.08Diluted
                  net income per share - pro forma
              
              $
              0.78
              
              $
              2.15
              
              $
              0.24
              
              $
              2.07
  On
        June
        16, 2005, the Company’s stockholders approved the Company’s 2005 Equity
        Incentive Plan (the “Plan”), pursuant to which an aggregate of 1,000,000 shares
        of common stock of the Company are reserved for issuance upon exercise of
        stock
        options or other equity awards made under the Plan. Under the Plan, the Company
        may award stock options, stock issuances and other equity interests in the
        Company to employees, officers, directors, consultants and advisors of the
        Company and its subsidiaries and to any other persons the Board of Directors
        determines to have made or is expected to make contributions to the Company.
        Since approval of the Plan, 360,000 options have been granted under the
        Plan.
 
 *Correction
        of Error*
 
 In
        May
        2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections”,
        which replaces APB 20, “Accounting Changes”, and SFAS 3, “Reporting Accounting
        Changes in Interim Financial Statements - An Amendment of APB Opinion No.
        28”.
        SFAS 154 provides guidance on the accounting for and the reporting of accounting
        changes and error corrections. It establishes retrospective application,
        or the
        latest practicable date, as the required method for reporting a change in
        accounting principle and the reporting of a correction of an error. SFAS
        154 is
        the required method for reporting a change in accounting principle and the
        reporting of a correction of an error. The Company has adopted SFAS 154 to
        correct an error made during the quarter ended September 30, 2005 and discovered
        during the quarter ended March 31, 2006.
 
  10
  **PRESSURE
        BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
        BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF SEPTEMBER 30, 2005**
  On
        March
        15, 2006, the Company received $1,094,162 from Wells Fargo Corporate Trust
        Escrow Services, representing the remaining principal and interest held in
        escrow from the 2004 sale of the assets and certain liabilities of the BBI
        Core
        Businesses to SeraCare Life Sciences Inc., (“SeraCare”). The receipt of these
        funds triggered the recognition of taxable income, accounted for as an
        installment sale for federal income tax purposes. During the financial statement
        closing process for the quarter ended March 31, 2006, management determined
        that
        a deferred tax liability of approximately $220,000 should have been established
        during the quarter ended September 30, 2005, the period in which the
        Company filed its federal income tax return. It was also determined
        that the Company’s deferred tax liability in connection with the unrealized gain
        on Panacos Pharmaceuticals, Inc., should be reduced by approximately
        $123,000.
 
 For
        the
        nine months ended September 30, 2005, the impact to basic and diluted earnings
        per share from discontinued operations was a decrease from $0.30 to $0.23
        and
        from $0.30 to $0.22, respectively. For the three months ended September 30,
        2005, the impact to basic and diluted earnings per share from discontinued
        operations was a decrease from $0.38 to $0.29 and from $0.36 to $0.27,
        respectively.
 
 **(2)** **Recent
        Accounting Standards**
  In
        December 2004, the Financial Accounting Standards Board (FASB) issued a revision
        of Statement of Financial Accounting Standards No. 123, “Accounting for
        Stock-Based Compensation” (SFAS 123R). SFAS 123R supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees,” and its related implementation
        guidance and eliminates the alternative to use Opinion 25’s intrinsic value
        method of accounting that was provided in Statement 123 as originally issued.
        Under Opinion 25, issuing stock options to employees generally resulted in
        recognition of no compensation cost. SFAS 123(R) requires all entities recognize
        compensation expense in an amount equal to the fair value of share-based
        payments (e.g. stock options and restricted stock) granted to employees.
        This
        applies to all transactions involving the issuance of our own equity in exchange
        for goods or services, including employee services. Upon adoption of SFAS
        123(R), all stock option awards to employees will be recognized as expense
        in
        the income statement, typically over any related vesting period. SFAS 123(R)
        carried forward the guidance from SFAS 123 for payment transactions with
        non-employees. The Securities and Exchange Commission amended the compliance
        date on April 14, 2005, to require public companies to adopt the standard
        as of the beginning of the first annual period that begins after June 15,
        2005. We will, therefore, be required to adopt SFAS 123(R) in the first quarter
        of 2006.
  SFAS
        123(R) permits public companies to adopt its requirements using one of two
        methods:
  1.
              Modified
                  Prospective Method under which compensation cost is recognized
                  beginning
                  with the effective date (a) based on the requirements of SFAS 123(R)
                  for all share-based payments granted after the effective date and
                  (b) based on the requirements of SFAS 123 for all awards granted to
                  employees prior to the effective date of SFAS 123(R) that remain
                  unvested
                  on the effective date.
  2.
              Modified
                  Retrospective Method which includes the requirements of the modified
                  prospective method described above, but also permits entities to
                  restate
                  based on the amounts previously recognized under SFAS 123 for purposes
                  of
                  pro forma disclosures either (a) all prior periods presented or
                  (b) prior interim periods of the year of
                  adoption.
  At
        this
        time, we have not determined which method of adoption we will use.
 
 In
        May
        2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections”,
        which replaces APB 20, “Accounting Changes”, and SFAS 3, “Reporting Accounting
        Changes in Interim Financial Statements - An Amendment of APB Opinion No.
        28”.
        SFAS 154 provides guidance on the accounting for and the reporting of accounting
        changes and error corrections. It establishes retrospective application,
        or the
        latest practicable date, as the required method for reporting a change in
        accounting principle and the reporting of a correction of an error. SFAS
        154 is
        the required method for reporting a change in accounting principle and the
        reporting of a correction of an error. The Company has adopted SFAS 154 to
        correct an error made during the quarter ended September 30, 2005 and discovered
        during the quarter ended March 31, 2006.
 
 On
        March
        15, 2006, the Company received $1,094,162 from Wells Fargo Corporate Trust
        Escrow Services, representing the remaining principal and interest held in
        escrow from the 2004 sale of the assets and certain liabilities of the BBI
        Core
        Businesses to SeraCare. The receipt of these funds triggered the recognition
        of
        taxable income, accounted for as an installment sale for federal income tax
        purposes. During the financial statement closing process for the quarter
        ended
        March 31, 2006, management determined that a deferred tax liability of
        approximately $220,000 should have been established during the quarter ended
        September 30, 2005, the period in which the Company filed its
        federal income tax return. It was also determined that the Company’s deferred
        tax liability in connection with the unrealized gain on Panacos Pharmaceuticals,
        Inc., should be reduced by approximately $123,000.
 11
  **PRESSURE
        BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
        BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF SEPTEMBER 30, 2005**
 
 **(3)**  **Discontinued
        Operations**
  (a) BBI
        Diagnostics and BBI Biotech Segments
  On
        September 14, 2004, the Company completed the sale of substantially all of
        the assets and selected liabilities of its BBI Diagnostics and BBI Biotech
        divisions, previously classified as assets and liabilities held for sale
        as of
        September 30, 2004, to SeraCare pursuant to the Asset Purchase Agreement,
        for a
        purchase price of $30 million in cash of which $27.5 million was paid
        at the closing and the remaining $2.5 million was deposited in escrow
        pursuant to an escrow agreement expiring in March 2006. Following the
        release to SeraCare of $1.4 million of the escrow funds to satisfy the final
        adjustment amount in February 2005, approximately $1.1 million remains in
        escrow
        until March 2006 to secure our continuing indemnification obligations for
        breaches of representations and warranties, covenants or other agreements
        that
        remain in accordance with the terms of the Asset Purchase Agreement. The
        amounts
        associated with the sale of these assets and selected liabilities to SeraCare
        are reported as discontinued operations in the accompanying financial
        statements, in accordance with paragraphs 30 and 42 of Statement of Financial
        Accounting Standards No. 144 “Accounting for the Impairment or Disposal of
        Long-Lived Assets”.
  (b) Clinical
        Laboratory Testing Services Segment
  In
        February 2001, the Company sold the business and certain assets and liabilities
        of its clinical laboratory business, BBI Clinical Laboratories, Inc. (“BBICL”),
        a wholly-owned subsidiary of the Company, to a third party for an adjusted
        purchase price of $8,958,000. The Company retained certain other assets and
        liabilities of BBICL, primarily property, plant and equipment, together with
        the
        facility lease subsequent to the closing date. The Company wrote down all
        of the
        retained assets not otherwise redistributed to other business units to their
        estimated net realizable value. The Company’s estimate of remaining short and
        long term accrued liabilities to exit the clinical laboratory testing business
        is approximately $89,000 as of September 30, 2005. The major component of
        this
        accrual is for potential tax audit adjustments associated with the sale of
        assets and the long term record retention of medical and related records.
        The
        statute of limitations for the relevant tax year lapses in the last quarter
        of
        2005 and will be adjusted accordingly.
  **(4)** **Assets
        and Liabilities Transferred Under Contractual
        Arrangement**
  In
        June 2004, PBI Source Scientific, Inc. transferred certain of its
        assets and liabilities to a newly formed limited liability company known
        as
        Source Scientific, LLC. At the time of the transfer, PBI Source
        Scientific, Inc. owned 100% of the ownership interests of Source
        Scientific, LLC. PBI Source Scientific, Inc. subsequently sold 70% of its
        ownership interests of Source Scientific, LLC to Mr. Richard Henson and
        Mr. Bruce A. Sargeant pursuant to a purchase agreement (the “Source
        Scientific Agreement”). As a result of the sale of 70% of PBI Source’s ownership
        interests, Mr. Henson and Mr. Sargeant each own 35% and PBI Source
        owns the remaining 30% of Source Scientific, LLC. Under the Source Scientific
        Agreement, the Company received notes receivable in the aggregate amount
        of
        $900,000 (the “Notes”) payable at the end of three years bearing 8% interest.
        Despite the Company’s intent to exit the laboratory instrumentation business,
        the Company may be viewed as having a continuing involvement in the business
        of
        Source Scientific, LLC due to the fact that the Company has the right to
        designate one or potentially three members of the Board of Managers of Source
        Scientific, LLC. Because of this factor, even though the transaction is treated
        as a divestiture for legal purposes, the Company has not recognized the
        transaction as a divestiture for accounting purposes in accordance with
        Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”)
        Topic 5E, *Accounting
        for Divestiture of a Subsidiary or Other Business Operation* . In
        accordance with SAB Topic 5E, the Company has recorded the assets and
        liabilities associated with the Source Scientific, LLC operation on the
        Company’s unaudited consolidated balance sheet as of September 30, 2005 under
        the captions “Assets transferred under contractual arrangements” and
“Liabilities transferred under contractual arrangements” and has recorded a
        charge to income under the caption “Other operating (charges), net” in the
        Company’s unaudited consolidated statements of operations for the three and nine
        months ended September 30, 2005 and 2004 equal to the amount of the loss
        attributable to the business of Source Scientific for the respective periods
        presented. In accordance with SAB Topic 5E, the Company will continue this
        accounting treatment until circumstances have changed or until the net assets
        of
        the Source Scientific, LLC business have been written down to zero (or a
        net
        liability is recognized in accordance with U.S. GAAP. As of September 30,
        2005
        assets and liabilities transferred under contractual arrangement consist
        of the
        following:
 
  12
 **PRESSURE
          BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
          BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF SEPTEMBER 30, 2005**
 **September
                  30,**
                  **2005**Cash
              
              $
              122,797Accounts
                  receivable, net
              
              
              210,685Inventory
              
              
              559,356Prepaid
                  assets
              
              
              106,754Fixed
                  assets, net
              
              
              99,102Goodwill
              
              
              227,084All
                  other assets
              
              
              61,753Total
                  assets transferred under contractual arrangement
              
              
              1,387,531Accounts
                  payable
              
              
              (323,149
              )Accrued
                  expenses and compensation
              
              
              (268,845
              )Deferred
                  revenue
              
              
              (407,583
              )Equity
                  contributions
              
              
              (57,860
              )Total
                  liabilities transferred under contractual arrangement
              
              
              (1,057,437
              )Net
                  assets and liabilities transferred under contractual
                  obligations
              
              $
              330,094
  **(5)** **Computation
        of Net Income (Loss) per Share**
  Basic
        income (loss) per share is computed by dividing income (loss) available to
        common shareholders by the weighted average number of common shares outstanding.
        Diluted income (loss) per share is computed by dividing income (loss) available
        to common shareholders by the weighted average number of common shares
        outstanding plus additional common shares that would have been outstanding
        if
        potential dilutive common shares had been issued. For purposes of this
        calculation, stock options are considered common stock equivalents in periods
        in
        which they have a dilutive effect. Options that are anti-dilutive are excluded
        from the calculation.
  Potentially
        dilutive securities having a net effect of 113,798 and 44,606 common shares
        for
        the three and nine months ended September 30, 2005 are reflected below. 
Options that are anti-dilutive of 24,500 and 79,000 common shares for the
        three
        and nine months ended September 30, 2005 respectively, were not included
        in the
        computation of diluted income (loss) per share for these periods because
        to do
        so would have been antidilutive.  Potentially dilutive securities having a
        net effect of 131,233 and 80,898 common shares for the three and nine months
        ended September 30, 2004 were not included in the calculation as to do so
        would
        have been anti-dilutive. Options that were anti-dilutive of 46,540 and 6,001
        for
        the three and nine months ended September 2004 was not included in the
        computation of diluted income (loss) per share because to do so would have
        been
        anti-dilutive.
 
 **Three
                  Months Ended**
              
              **Nine
                  Months Ended****September
                  30,**
              
              **September
                  30,**Numerator:
              
              2005
              
              2004
              
              2005
              
              2004Income
                  (loss) from continuing operations, basic & diluted
              
              $
              1,308,969
              
              $
              (663,070
              )
              $
              171,667
              
              $
              (1,749,040
              )Demoninator:Weighted
                  Average Shares Outstanding, basic
              
              
              2,424,189
              
              
              6,824,075
              
              
              3,157,495
              
              
              6,843,329Net
                  effect of dilutive common stockequivalents-based
                  on treasury stockmethod
                  using average market price
              
              
              113,798
              
              
              -
              
              
              44,606
              
              
              -Weighted
                  Average Shares Outstanding, diluted
              
              
              2,537,987
              
              
              6,824,075
              
              
              3,202,101
              
              
              6,843,329Income
                  (loss) per share from continuing operations, - basic
              
              $
              0.54
              
              $
              (0.10
              )
              $
              0.05
              
              $
              (0.26
              )Income
                  (loss)per share from continuing operations, - diluted
              
              $
              0.52
              
              $
              (0.10
              )
              $
              0.05
              
              $
              (0.26
              )
  13
 **PRESSURE
            BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
            BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
            OF SEPTEMBER 30, 2005**
 **(6)** **Related
        Party Transaction**
  In
        January 2002, the Company pledged the $1,000,000 interest bearing deposit
        at a financial institution to secure its limited guaranty of loans in the
        aggregate amount of $2,418,000 from the financial institution to an entity
        controlled by Richard T. Schumacher, a Director and the Company’s current
        President and Chief Executive Officer. In January 2003, the $1,000,000 held
        in the interest bearing deposit account pledged to the financial institution
        to
        secure the Company’s limited guaranty was used by the financial institution to
        satisfy its limited guaranty obligation to the financial institution. As
        of
        September 30, 2005, the Company maintained a $1.0 million loan receivable
        from Mr. Schumacher. The Company previously maintained a junior security
        interest in collateral pledged by Mr. Schumacher to the financial
        institution. The collateral includes all of Mr. Schumacher’s shares of PBI
        common stock. Following the payment in full by Mr. Schumacher of his loan
        to the financial institution in February 2005, the Company became the
        holder of a first priority security interest in 489,659 of Mr. Schumacher’s
        shares of common stock of Pressure BioSciences to secure the repayment of
        the
        Company’s $1,000,000 loan receivable together with associated accrued interest
        from Mr. Schumacher and are held as collateral. The collateral and personal
        assets of Mr. Schumacher may not be sufficient to permit the Company to
        fully recover the principal, interest and other costs associated with this
        loan
        receivable. If the value of the collateral decreases, the Company may have
        to
        write down or write off the loan receivable or associated accrued interest.
        Therefore, the Company cannot be certain that it will collect the full amount
        of
        the loan receivable.
  As
        of
        September 30, 2005, the Company evaluated the recoverability of the $1,000,000
        loan receivable from Mr. Richard T. Schumacher, which is reflected on the
        balance sheet in stockholders’ equity as a loan receivable and any accrued
        interest as of September 30, 2005. In connection with the Company’s evaluation
        of the recoverability of the loan receivable as of September 30, 2005 the
        Company performed a test for impairment of the loan receivable by analyzing
        the
        value of the collateral. This test included, among other things, a review
        of the
        current trading price of the Company’s common stock after taking into account
        factors that may affect the Company’s ability to sell such stock in the event it
        were to foreclose on the collateral to repay the loan receivable and any
        accrued
        and unpaid interest. After performing the impairment test, the Company
        determined that the loan receivable was not impaired. The ultimate value
        that
        the Company may recover is dependent on numerous factors including the Company’s
        stock price, market conditions relative to the value of and ability to sell
        the
        collateral, and the financial status of the Company’s President and Chief
        Executive Officer. Based on the Company’s assessment as of September 30, 2005,
        the Company estimates that the value of the collateral approximates the amount
        of the recorded loan receivable.  If actual market conditions are less
        favorable, the Company’s stock price declines or other factors arise that are
        significantly different than those experienced as of September 30, 2005,
        an
        impairment of the loan receivable together with associated accrued interest
        is
        likely to be required.  The Company plans to continue to monitor and test
        the collateral for impairment due in large part to the relatively low trading
        volume of the Company’s common stock and recent volatility in our stock price,
        ranging from a low of $2.50 per share to a high of $6.70 per share from July
        1,
        2005 to September 30, 2005.
  **(7)** **Segment
        Reporting and Related Information**
  SFAS
        No. 131, “Disclosures about Segments of an Enterprise and Related
        Information,” establishes standards for the way that public business enterprises
        report information about operating segments in annual financial statements
        and
        requires selected information about operating segments in interim financial
        reports. It also establishes standards for related disclosures about products
        and services, geographic areas and major customers. Operating segments are
        components of an enterprise for which separate financial information is
        available that is evaluated regularly by senior management in deciding how
        to
        allocate resources and in assessing the performance of each segment. The
        Company
        is organized along legal entity lines and senior management regularly reviews
        financial results for all entities, focusing primarily on revenue and operating
        income. The Company’s underlying accounting records are maintained on a legal
        entity basis for government and public reporting requirements, as well as
        for
        segment performance and internal management reporting.
  Following
        the Company’s sale of its core businesses and its laboratory instrumentation
        business unit, the single remaining segment is the pressure cycling technology
        (PCT) family of products and services.
  **(8)** **Debt**
  The
        Company does not currently have debt obligations beyond its lease for the
        Gaithersburg, MD office as described in Note 10, nor does the Company have
        a
        line of credit from which it can borrow.
  14
 **PRESSURE
            BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
            BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
            OF SEPTEMBER 30, 2005**
 **(9)** **Inventories**
  Inventories
        represented are primarily finished units available for sale and those units
        at
        various stages of manufacturer.  As of September 30, 2005, finished goods
        included BarocyclerTM NEP3229 units and PULSETM Tubes.
  As
        of
        September 30, 2005, inventories were comprised as follows:
 
 **As
                    of**
                    **September
                      30,**
                    **2005**
              
              **As
                    of**
                  **December
                    31,**
                  **2004**Raw
                  materials
              
              $
              28,593
              
              $
              122,253Work-in-process
              
              
              71,015
              
              
              31,764Finished
                  goods
              
              
              244,340
              
              
              3,800$
              343,948
              
              $
              157,817
  **(10)**  **Commitments
        and Contingencies**
  *Leases*
  On
        May 5, 2005, the Company entered into a lease agreement with Saul Holdings
        Limited Partnership to lease approximately 2,784 square feet of office space
        located at 209 Perry Parkway, Gaithersburg, Maryland for a term of twelve
        months
        with a base annual rent in the amount of $55,680, or $4,640 per month during
        the
        initial term of the lease, plus $1,245 per month for operating
        expenses.
  *Royalty
        Commitments*
  In
        1998,
        the Company acquired all the remaining common stock outstanding of
        BioSeq Inc., a development stage company involved with PCT. In accordance
        with the provisions of a technology transfer agreement assumed in the
        transaction, the Company is obligated to pay a 5% royalty on net sales until
        March 2016 of future sales by the Company utilizing PCT. Net sales include
        the trade revenues related to units sold or leased as well as PULSETM Tube
        revenues.  The Company announced the availability of its PCT products for
        commercial sale in the latter part of year 2002. The Company’s minimum royalty
        payment requirements ceased in the fourth quarter of 2003 in accordance with
        contractual provisions. The royalty obligation for the third quarter of 2005
        was
        approximately $545.
  *Purchase
        Commitments*
  In
        June 2004, Source Scientific, LLC agreed to provide engineering,
        manufacturing, and other related services for the Company’s pressure cycling
        technology products until September 30, 2005. Under the agreement, it was
        estimated that reimbursement to Source Scientific, LLC by the Company was
        expected to be at the rate of $25,000 per month. Since the Company has met
        the
        minimum commitment under the agreement, and there are no future minimum
        payments, all obligations are contingent upon actual services being rendered
        to
        us by Source Scientific LLC.  The Company expects to continue to utilize
        the services of Source Scientific, LLC for the Company’s pressure cycling
        technology products on a purchase order basis.
  *Indemnifications*
  In
        connection with the sale of substantially all of the assets of the Company’s BBI
        Diagnostics and BBI Biotech business units to SeraCare, pursuant to the Asset
        Purchase Agreement, the Company agreed to indemnify SeraCare for any losses
        from
        breaches of most of the Company’s representations, warranties or covenants that
        occur prior to June 14, 2006. The Company’s indemnification obligations for
        breaches of some representations and warranties, however, extend for a longer
        period of time. The Company’s indemnification obligations are limited by an
        overall cap equal to the adjusted purchase price.
  15
 **PRESSURE
          BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
          BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF SEPTEMBER 30, 2005**
 In
        November 2004, in accordance with the terms of the Asset Purchase
        Agreement, SeraCare delivered the closing balance sheet, which reflected
        a
        deficiency of approximately $3.1 million when compared to the target net
        asset value of $8.5 million. The Company objected to certain calculations
        in the closing balance sheet, including, without limitation, SeraCare’s
        calculation of accounts receivable and inventory. In December 2004, the
        Company settled its dispute with SeraCare concerning the collectibility of
        accounts receivable sold to SeraCare in connection with the Asset Purchase
        Agreement. The Company agreed that, solely for purposes of settling its dispute
        with SeraCare, $412,192 of accounts receivable would be deemed past due,
        therefore resulting in an adjustment to the purchase price requiring the
        Company
        to pay SeraCare that amount. The Company also agreed that the $412,192
        deficiency would be released from the $2.5 million held in escrow; thereby
        leaving approximately $2.1 million remaining in escrow. In
        February 2005, the Company further agreed with SeraCare to settle the
        parties remaining differences relating to the closing balance sheet, including
        the calculation of inventory, by releasing to SeraCare an additional $1,000,000
        from the escrow account. Additionally, the parties released all claims they
        may
        have had against the other with respect to the closing balance sheet and
        certain
        other representations and warranties contained in the Asset Purchase Agreement
        relating to the closing balance sheet items. Following the release of the
        escrow
        funds, approximately $1.1 million remains in escrow until March 2006
        to secure the Company’s continuing indemnification obligations for breaches of
        representations and warranties, covenants or other agreements that remain
        in
        accordance with the terms of the Asset Purchase Agreement. The combined effect
        of these two settlements relating to the closing balance sheet resulted in
        a
        $1,412,192 reduction in the purchase price and a corresponding reduction
        in the
        gain on sale.
  On
        March
        22, 2005, the Company received a claim for indemnification from SeraCare
        relating to testing and other services performed by the Company for the
        University of Pittsburgh prior to the sale of the BBI Diagnostics and BBI
        Biotech business units to SeraCare.  The claim for indemnification is for
        an unspecified amount relating to the cost of retesting certain of the samples
        previously tested by the Company.  The Company believes the cost of
        retesting to be not material. However, this claim for indemnification, as
        well
        as the possibility of additional notices or claims for indemnification from
        SeraCare could reduce or eliminate altogether the amount the Company ultimately
        receives from the escrow account.  If the Company is required to pay an
        additional amount in excess of the escrow amount, the Company will have less
        cash available to fund its operations, its business may be harmed and, if
        it is
        subject to additional indemnification claims or unanticipated expenses or
        liabilities, it may be difficult to continue the Company’s business as planned
        unless it is able to obtain equity or debt financing.
  **(11)** **Investments
        in Marketable Securities**
  On
        March 11, 2005,V.I. Technologies Inc. (“Vitex”) announced that it had
        closed its merger with Panacos Pharmaceuticals, Inc. (“Panacos”), pursuant
        to the Agreement and Plan of Merger dated as of June 2, 2004, as amended on
        November 5, 2004, November 28, 2004, December 8, 2004, and
        February 14, 2005 (the “Merger Agreement”). The merger was approved by the
        stockholders of both Vitex and Panacos at their respective meetings on
        March 10, 2005. Panacos stockholders received an aggregate of approximately
        227,500,000 shares of Vitex common stock, or slightly over 80% of the
        outstanding shares of Vitex Common Stock, after giving effect to the merger,
        and
        before giving effect to Vitex’s 1:10 reverse stock split, which was announced on
        March 14, 2005. The shares of Vitex common stock issued to the Panacos
        stockholders were registered with the Securities and Exchange Commission
        on a
        Registration Statement on Form S-4. Panacos stockholders received 6.75275
        shares of Vitex common stock for each share of Panacos common or preferred
        stock
        held by them at the effective time of the merger. As a result of the merger
        and
        the subsequent reverse stock split, the Company owned 1,012,920 shares of
        Vitex
        common stock in place of its Panacos capital stock. Fifteen percent of Vitex
        stock owned by former owners of Panacos stock, including fifteen percent
        of the
        Vitex common stock owned by the Company, or 151,938 shares, is being held
        in
        escrow per the Merger Agreement until September 2006.
  On
        August
        18, 2005, V.I. Technologies formerly changed its company name to Panacos
        Pharmaceticals Inc. and changed its trading symbol on the Nasdaq National
        Market
        to “PANC”.  During July and August of 2005, the Company sold 328,986 shares
        of Panacos stock which resulted in a realized gain of $2,838,491 during the
        quarter ended September 30, 2005.
  On
        September 30, 2005, the closing price of Panacos common stock was $9.74 per
        share as quoted on the Nasdaq National Market. As of September 30, 2005 the
        Company had remaining 683,934 shares of Panacos common stock, that includes
        151,938 shares held in escrow noted above, which had a fair market value
        of
        $6,661,517.
  **(12)** **Fixed
        Assets**
  Fixed
        assets are comprised primarily of PCT related demonstration equipment, of
        which
        one PCT Barocycler TM NEP2017
        unit has been placed with a third party pursuant to an open term rental
        agreement.  Depreciation on PCT demonstration units is allocated over the
        expected useful life of approximately two years.  Upon the Company’s sale
        of assets to SeraCare in September 2004 and establishment of new corporate
        offices, approximately $40,000 has been capitalized related to office furniture
        and computer and related communication equipment and $25,000 related to lab
        equipment. Property and equipment at September 30, 2005 consisted of the
        following:
  16
 **PRESSURE
          BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
          BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF SEPTEMBER 30, 2005**
 
 **As
                  of****September
                  30, 2005**Laboratory
                  and manufacturing equipment
              
              $
              155,508Office
                  equipment
              
              
              57,428PCT
                  demonstration equipment
              
              
              210,536423,472Less
                  accumulated depreciation
              
              
              363,453Net
                  book value
              
              $
              60,019
  Depreciation
        expense for the nine months ended September 30, 2005 and 2004 was and $24,772
        and $78,727, respectively.
  **(13)** **Intangible
        Assets**
  The
        Company has classified as intangible assets those costs associated with the
        fair
        value of certain assets of the PCT business previously acquired by the Company.
        Intangible assets as of September 30, 2005 reflect acquired patents and related
        capitalized costs associated with the Company’s pressure cycling technology are
        being amortized to expense on a straight line basis at the rate of $12,158
        per
        quarter over the remaining useful life. The Company’s policy is to expense all
        patent related legal costs as incurred. Intangible assets at September 30,
        2005
        consisted of the following:
 
 **As
                  of****September
                  30, 2005**PCT
                  Patents
              
              $
              778,156Less
                  accumulated amortization
              
              
              340,444Net
                  Book Value
              
              $
              437,712
  Amortization
        expense for the nine months ended September 30, 2005 and 2004 was and $36,476
        and $36,476 respectively.
  **14)** **Prepaid
        Income Tax**
  Following
        the completion and filing its 2004 federal tax return, the Company recorded
        prepaid income taxes of $647,479 as a gain from discontinued operations. 
The prepayment reflects an overpayment of federal taxes related to the 2004
        estimated tax liability and payments associated with the Company’s sale of
        assets to SeraCare in September 2004. In September 2005 we performed a review
        of
        our estimated 2005 tax liability which included our year to date operating
        loss,
        the Panacos shares sold during the third quarter of 2005, along with estimates
        for the remainder of the year and determined to apply the 2004 overpayment
        to
        the estimated 2005 tax obligation of $458,226, resulting in a net prepaid
        income
        tax of $189,253 as of the quarter ended September 30, 2005.
  **15)** **Income
        Tax Receivable**
  Pursuant
        to completing and filing its 2004 state tax returns, the Company recorded
        an
        income tax receivable of $122,666.  The overpayment is related to taxes
        paid to the State of Maryland and associated to the allocation of the 2004
        sale
        of assets to SeraCare and estimated tax liability and payments made in December
        2004. The Company has applied for a refund.
  **(16)** **Stockholders’
        Equity**
  Pursuant
        to the completion of the Company’s tender offer on February 11, 2005, 5,203,001
        shares were purchased from shareholders at $3.50 per share which included
        754,275 shares issued upon exercise of stock options.  The Company utilized
        approximately $16.3 million of available cash, net of proceeds from the exercise
        of the stock options, to complete the transaction.  The purchase of the
        shares was accounted for under the treasury method and cost in excess or
        par
        value for the common shares was charged to additional paid in
        capital.
 
 17
 **PRESSURE
            BIOSCIENCES, INC., AND SUBSIDIARIES**
 **(FORMERLY
            BOSTON BIOMEDICA INC. AND SUBSIDIARIES)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
            OF SEPTEMBER 30, 2005**
 **Recent
        Business Developments**
  On
        November 3 rd and
        November 4 Th ,
        2005
        the Company sold an aggregate of 100,000 shares of Panacos stock for which
        we
        received approximately $882,990, net of charges and commission.  We
        continue to hold an additional 431,996 shares of Panacos and may receive
        an
        additional 151,938 shares which are being held in escrow until September
        2006,
        per the terms of the March 10, 2005 merger between Vitex and Panacos
        Pharmaceuticals. The closing price per share of Panacos common stock as reported
        on the Nasdaq National Market on November 8, 2005 was $8.83.
 
 
   18
  **ITEM
        2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION.**
  ***Overview***
  Following
        the closing of the sale of the assets and selected liabilities of BBI
        Diagnostics and BBI Biotech to SeraCare Life Sciences on September 14,
        2004, the transfer of certain assets and liabilities of PBI Source
        Scientific, Inc. to Source Scientific, LLC and subsequent sale of 70% of
        our ownership interests of Source Scientific, LLC in June 2004, our
        operations now consist primarily of our pressure cycling technology (PCT)
        business. The results of operations discussed herein focus on the PCT business
        activities and the corporate functions associated with being a public company.
        Operating results of PBI Source Scientific, Inc., excluding any PCT related
        activities, together with Source Scientific, LLC, are reported as “Other
        operating charges, net” hereunder. The operating results of our BBI Diagnostics
        and BBI Biotech divisions prior to their sale on September 14, 2004,
        together with the results of the discontinued operations of our clinical
        laboratory testing services segment (sold in February, 2001), are reported
        as
“Discontinued Operations” hereunder. Certain amounts included in the prior
        period’s financial statements have been reclassified to conform to the current
        period’s presentation.
  Our
        pressure cycling technology uses an instrument that is capable of cycling
        pressure between ambient and high levels at controlled temperatures to rapidly
        and repeatedly control the interactions of biomolecules. PCT utilizes our
        BarocyclerTM instrument and disposable PULSETM Tubes to release nucleic acids and
        proteins from plant/animal cells and tissues, as well as other organisms
        that
        are not easily disrupted by standard chemical and physical methods. We believe
        that our patented and proprietary pressure cycling technology employs a unique
        approach that has the potential for broad applications in a number of
        established and emerging fields, including genomics, proteomics, drug discovery
        and development, protein purification, pathogen inactivation, immunodiagnostics,
        food safety, and DNA sequencing.
  To
        date,
        we have primarily applied PCT to the area of sample preparation for genomics
        and
        proteomics. We have also developed scientific collaborations with several
        leading laboratories and academic institutions in the United States, which
        we
        expect will remain ongoing in 2005 and beyond. We further expect that the
        data
        generated by our collaborators will be publicly released in scientific
        publications and presentations, and that this could have an important positive
        impact on future sales of our PCT products. We have investigated the use
        of PCT
        for the inactivation of pathogens in human blood plasma, therapeutics, and
        diagnostic reagents and believe we have demonstrated the technical feasibility
        of applying PCT to immunodiagnostics, protein purification, pathogen
        inactivation, food safety, and DNA sequencing. We have obtained thirteen
        US and
        four foreign patents containing multiple claims covering the foregoing
        areas.
  As
        of
        September 30, 2005 we have invested in excess of $12.4 million in the
        development of our pressure cycling technology since 1997, with the funds
        coming
        from both internal and public sources. To date, we have received seven Small
        Business Innovative Research (“SBIR”) grants from the National Institutes of
        Health (“NIH”) aggregating approximately $2,000,000 (including two SBIR Phase II
        grants each in excess of $750,000) to develop PCT in the areas of microbial
        inactivation, sample processing, and Mycobacterium sample preparation. Most
        recently, in May 2004 we were awarded a $150,000 SBIR Phase I grant to
        study the use of PCT in applications to combat bio-terrorism. We have recently
        submitted proposals for three additional SBIR research grants and one non-SBIR
        grant and intend to continue to submit proposals to obtain grants in the
        future.  The review process generally takes six months for a proposal to
        receive feedback regarding the grants.
  In
        September 2002, we released for sale our first commercial PCT instrument,
        the BarocyclerTM NEP 2017. In 2002, we also released for sale PULSETM Tubes, which
        are single-use, disposable processing and storage tubes that work in conjunction
        with the BarocyclerTM NEP 2017. Sales of these products have been extremely
        limited. To date we have leased one and sold two pressure cycling technology
        systems (“PCT Sample Preparation System”) and a limited number of PULSETM Tubes.
        We believe that sales of our pressure cycling technology products have been
        adversely affected primarily as a result of the following factors: (1) the
        initial design and selling price of the BarocyclerTM, (2) the limited amount
        of research data available demonstrating its capabilities and potential,
        (3) the absence of a strong sales and marketing management team,
        (4) the absence of a strong promotional campaign after the commercial
        release of the BarocyclerTM NEP 2017, (5) the inability to execute our sales
        plan as a result of financial constraints prior to 2005, (6) current US
        economic conditions and uncertainties which negatively affected capital spending
        on laboratory instruments, (7) the financial condition of our company
        during 2003 and 2004, (8) the focus of our resources on other projects,
        including the sale of our BBI Diagnostics, BBI Biotech, and selected assets
        and
        liabilities of our laboratory instrumentation business units, a process that
        began in October 2002 and was completed in September 2004, (9) the
        time required to complete post-transaction issues related to the sale of
        BBI
        Diagnostics and BBI Biotech, and (10) the effort required during 2005 to
        restructure the Company including the effort to build a new corporate
        infrastructure.
  To
        address some of these factors associated with the disappointing sales of
        the
        BarocyclerTM NEP 2017, we have developed a less expensive and smaller, bench top
        version of the BarocyclerTM, the NEP 3229, which we expect will facilitate an
        easier and quicker purchase decision by potential customers. We have also
        generated additional research data to support our sales efforts. We believe
        that
        the new bench top BarocyclerTM will fill an immediate and growing need in the
        genomics and proteomics sample preparation market for a smaller, more affordable
        instrument that still provides the quality, reproducibility, and safety of
        the
        NEP 2017 PCT Sample Preparation System.
   19
  To
        increase market awareness of our products, in June 2005 we initiated a program
        to place up to twelve BarocyclerTM NEP3229 units in selected strategic customer
        sites by December 31, 2005 for a three month trial period, a period of time
        that
        we believe is sufficient to provide potential customers with the opportunity
        to
        develop and collect independent and objective data and statistical information.
        We believe that we will be able to generate sales of our products from these
        customers after the customer experiences the performance, reliability, and
        safety of the sample preparation process provided by the PCT Sample Preparation
        System. After the trial period, it is our expectation that a number of users
        will either purchase or lease the PCT BarocyclerTM instrument.
  From
        June
        to September 2005, we installed four bench top instruments under a “reagent
        rental agreement”, whereby the “collaborating sites” have full use of the
        instrument in their own facility, have agreed to purchase a certain number
        of
        PULSETM Tubes over the trial period, and have further agreed to use the PCT
        Sample Preparation System to generate data for public dissemination.  In
        October 2005, we installed an additional two units in collaborating sites
        under
        the reagent rental Agreement. In September 2005 we received the first purchase
        order for the PCT
        Sample Preparation System, which the Company delivered and installed on October
        6, 2005. On November 1, 2005, we received a signed lease agreement for a
        second
        instrument.  The Company believes that it will be successful in placing the
        remaining units prior to December 31, 2005.
  **RESULTS
        OF OPERATIONS**
  **THREE
        MONTHS ENDED SEPTEMBER 30, 2005 AND 2004**
  *Revenue*
  We
        had
        total revenue of $11,742 for the three months ended September 30, 2005, as
        compared to $68,901 for the three months ended September 30, 2004.
  PCT
        products & services: Product revenue totaled $11,742 for the three months ended September 30,
        2005,
        compared to $2,383 for the corresponding period of 2004. Product revenue
        in 2005
        and 2004 includes lease payments from one customer and sales in 2005 of PULSETM
Tubes to five customers in association with the collaboration agreements
        noted
        previously. There were no BarocyclerTM sales in the quarters ended September 30,
        2005 or September 30, 2004.
  Grant
        Revenue: Grant revenue has consisted predominately of SBIR (Small Business Innovation
        Research) funding activity through the National Institutes of Health. Grant
        revenue is reflective of high research and development costs, and consists
        predominately of “cost plus” contacts.  There was no grant revenue for the
        three months ended September 30, 2005 compared to $66,518 for the corresponding
        period in 2004. The decrease in PCT grants and services revenue was primarily
        related to the completion of work in early and mid-2004 on two Phase-II SBIR
        Grants resulting in a lower level of research conducted under these
        grants.  We expect to continue to submit new SBIR and other research grant
        proposals to fund future research. The review process generally takes six
        months
        for a proposal to receive feedback regarding the grants.
  During
        the three months ended September 30, 2005, we placed 3 additional bench top
        instruments under a “reagent rental agreement”, whereby the “collaborating
        sites” have full use of the instrument in their own facility, have agreed to
        purchase a certain number of PULSETM Tubes over the trial period, and have
        further agreed to use the PCT Sample Preparation System to generate data
        for
        public dissemination.
  *Cost
        of PCT Products and Services*
  The
        cost
        of PCT products and services was $33,966 for the three months ended September
        30, 2005 compared to $20,654 for the comparable period in 2004. The increase
        in
        2005 was primarily the result of a higher sales volume of PULSETM Tubes related
        to increased PULSETM Tube revenues, transportation costs related to rental units
        of BarocyclerTM units pursuant to reagent rental agreements, and the inclusion of
        field support and deployment costs related to the placement of collaboration
        site units.
  *Cost
        of Grant Revenue*
  We
        did
        not perform any services or incur any costs under grant projects during the
        third quarter of 2005.  Costs of grant projects billed in the third quarter
        of 2004 are included in research and development.
   20
  *Research
        and Development*
  PCT
        related research and development expenditures decreased to $156,529 in the
        three
        months ended September 30, 2005 from $239,315 for the comparable period of
        2004.  The decrease was primarily due to the lower level of research and
        development expenditures on SBIR grants as described above, reduced headcount,
        and more efficient expenditures on the development of the new bench top
        BarocyclerTM through our outsourcing partner, Source Scientific, LLC. As
        described elsewhere, in connection with the Source Scientific Agreement,
        Source
        Scientific, LLC agreed to provide engineering, manufacturing, and other related
        services for our pressure cycling technology products until September 30,
        2005.  Since we have met the minimum commitment under the agreement, and
        there are no future minimum payments; all obligations are contingent upon
        actual
        services being rendered to us by Source Scientific LLC. We do expect to continue
        to utilize the services of Source Scientific, LLC for the continued development
        and manufacture of the Company’s pressure cycling technology
        products.
  *Selling
        and Marketing*
  PCT
        related selling and marketing expenses increased to $39,954 for the three
        months
        ended September 30, 2005 from $12,278 for the comparable period of 2004,
        an
        increase of $27,676. This increase was due to higher headcount, increased
        attendance at trade shows, and the cost of placement activities for
        collaboration sites.
  *General
        and Administrative*
  General
        and administrative costs totaled $320,195 for the three months ended September
        30, 2005, as compared to $140,597 for the comparable period of 2004, an increase
        of $179,598.  This increase was primarily due to an increase in headcount,
        costs of a new corporate office, and other infrastructure expenses not present
        in the same quarter 2004.
  *Stock
        Based Compensation*
  In
        conjunction with the Asset Sale on September 14, 2004, the Company’s Board
        of Directors voted to extend the termination date of all stock options granted
        to employees of BBI Diagnostics and BBI Biotech to the later of 90 days from
        the
        closing of the SeraCare transaction or the termination of the contemplated
        tender offer. In accordance with the provisions of FASB Interpretation No.
        44,
        we recognized non-cash stock-based compensation of $281,737 in the third
        quarter
        of 2004.  There were no charges for the three months ended September 30,
        2005.
  *Operating
        Loss from Continuing Operations*
  The
        operating loss of the PCT business was $538,902 for the three months ended
        September 30, 2005 as compared to an operating loss of $625,680 for the
        comparable period in 2004, a decrease in loss of $86,778. The decrease in
        the
        operating loss for the three months ended September 30, 2005 compared to
        the
        same period of 2004 was primarily due to higher charges in 2004 related to
        the
        non-cash stock based compensation charge referred to above offset somewhat
        by
        increased selling and general administrative expenses.
  *Gain
        on Sale of Securities*
  In
        the
        three months ended September 30, 2005, we recorded a gain on the sale of
        328,986
        shares of our Panacos Pharmaceuticals shares available for sale (formerly
        V.I.
        Technologies).  The shares sold in the three month period generated a gain
        of $2,838,491.  We recorded a tax liability related to the sale of the
        securities in the quarter of $1,088,360 reflected in tax provision. As indicated
        in our press release of August 9, 2005, we continue to monitor the stock
        price
        and sales volume of Panacos, and may decide to sell additional shares from
        time
        to time.
  *Other
        Operating (Charges), net*
  The
        non-PCT related activities of PBI Source Scientific, Inc., which reflects
        the activity of Source Scientific, LLC, had an operating loss of $140,648
        for
        the three months ended September 30, 2005, as compared to an operating loss
        of
        $30,612 for the three months ended September 30, 2004. The increased loss
        was
        the result of lower revenues caused by a delay in orders at Source Scientific
        LLC.
  *Interest
        Income / (Expense)*
  Interest
        income totaled $62,699 for the three months ended September 30, 2005. 
There was no interest expense for the three months ended September 30,
        2005.  Interest income totaled $11,705 for the three months ended September
        30, 2004 which was offset by interest expense of $18,483 for the same period.
        Increased interest income was in part the result of interest earned on
        investments from the proceeds associated with the sale of our BBI Diagnostics
        and BBI Biotech business units to SeraCare and interest earned on cash proceeds
        related to the sale of shares in Panacos Pharmaceuticals’ stock.
 21
  In
        the
        third quarter of 2005, we have recognized the benefit of accrued interest
        paid
        related to the Director / CEO’s loan receivable in the amount of $21,147. In
        2004, accrued interest related to the loan receivable was not recognized. 
Additionally, in 2004 we incurred an interest payment on a previous line
        of
        credit totaling $18,483.
  *Income
        Taxes*
  In
        the
        quarter ended September 30, 2005 we recorded a net tax provision of
        $912,671.  We recorded a tax provision of $1,088,360 as a result of the
        sale of securities which was somewhat offset by a tax benefit of $175,689
        related to the operating loss for the period.  There was no benefit
        recorded in the same quarter of 2004.
  *Income
        (loss) from discontinued operations*
  The
        amounts associated with the sale of our BBI Diagnostics and BBI Biotech business
        units to SeraCare are reported as discontinued operations in the accompanying
        financial statements, in accordance with paragraphs 30 and 42 of Statement
        of
        Financial Accounting Standards No. 144 “Accounting for the Impairment or
        Disposal of Long-Lived Assets” as previously described above.
  For
        the
        three months ended September 30, 2005, the net loss from discontinued operations
        was $3,340, as compared to a net loss of $440,212 for the same period in
        2004.  The decrease in net loss from discontinued operations is a result of
        negative operating margin generated from revenues realized of our former
        BBI
        Diagnostics and BBI Biotech business units included in the September 2004
        quarter. These businesses are not part of our operations in 2005.
  *Gain
        on Sale of Net Assets Related to Discontinued Operations*
  For
        the
        three months ended September 30, 2005, we recorded a benefit of $701,699
        for the
        overpayment of 2004 taxes related to the sale of net assets in 2004.  The
        impact resulted from the utilization of favorable treatment of tax credits,
        utilization of installment sale tax treatment related to sale of assets,
        and
        treatment of the sale of the Company’s 70% interest in Source Scientific
        LLC.   For the third quarter of 2004, we recorded a benefit for the
        sale of the BBI Diagnostics and BBI Biotech business units of $15,868,025
        net of
        tax estimates of $3,925,200.
  *Net
        Income*
  Overall,
        for the quarter ended September 30, 2005 we realized net income of $2,007,328
        compared to net income for the quarter ended September 30, 2004 of $14,764,743
        for reasons outlined above.
  **NINE
        MONTHS ENDED SEPTEMBER 30, 2005 AND 2004**
  *Revenue*
  We
        had
        total revenue of $21,984 for the nine months ended September 30, 2005, as
        compared to $304,993 for the nine months ended June 31, 2004, a decline of
        $283,009.
  PCT
        products & services: Product revenue totaled $21,984 for the nine months ended September 30, 2005,
        compared to $12,939 for the corresponding period of 2004. Product revenue
        in
        2005 and 2004 included lease payments from one customer and sales of PULSETM
Tubes from several customers pursuant to the collaboration agreements in
        place.
        There were no BarocyclerTM sales in the nine months ended September 30, 2005 or
        2004.
  Grant
        Revenue: Grant
        revenue has consisted predominately of SBIR funding activity through the
        National Institutes of Health. There was no grant revenue for the nine months
        ended September 30, 2005 compared to $292,054 for the corresponding period
        in
        2004. The decrease in PCT grants and services revenue was primarily related
        to
        the completion of work in 2004 on two Phase-II SBIR Grants resulting in a
        lower
        level of research conducted under SBIR research grants in 2005.  We expect
        to continue to submit new SBIR and other research grant proposals to fund
        future
        research. The review process generally takes six months for a proposal to
        receive feedback regarding the grants.
 22
  *Cost
        of Grant Services*
  We
        did
        not perform any services or incur any costs under grant projects during the
        nine
        months ended September 30, 2005 compared to the nine months ended September
        30,
        2004.  Costs related to grant activities in 2004 have been included in
        research and development.
  *Cost
        of PCT Products and Services*
  The
        cost
        of PCT products and services was $61,653 in the nine months ended September
        30,
        2005 compared to $55,673 for the comparable period of 2004. The increase
        in 2005
        was primarily the result of a higher sales volume of PULSETM Tubes related to
        increased PULSETM Tube revenues,  amortization costs related to rental units
        of BarocyclerTM units pursuant to reagent rental agreements, and the inclusion of
        increased field support and deployment costs related to the placement of
        collaboration site units.
  *Research
        and Development*
  PCT
        related research and development expenditures decreased to $374,147 in the
        nine
        months ended September 30, 2005 from $672,087 for the comparable period of
        2004.
        The decrease was primarily due to the lower level of research and development
        expenditures related to the SBIR grants as described above, reduced headcount,
        and decreased expenditures on the development of the new bench top BarocyclerTM
through our outsourcing partner, Source Scientific, LLC. As described elsewhere,
        in connection with the Source Scientific Agreement, Source Scientific, LLC
        agreed to provide engineering, manufacturing, and other related services
        for our
        pressure cycling technology products until September 30, 2005. During the
        nine months ended September 30, 2005 we incurred charges of approximately
        $170,000.
  *Selling
        and Marketing*
  PCT
        related selling and marketing expenses decreased to $93,590 for the nine
        months
        ended September 30, 2005 from $138,158 for the comparable period of 2004.
        The
        decrease was due to reduced headcount, a reduction in trade shows attended
        in
        first half of 2005 verses 2004, and lower production of marketing
        materials.
  *General
        and Administrative*
  General
        and administrative costs for the nine months ended September 30, 2005 totaled
        $1,361,157 compared to $762,597 for the same period of 2004, an increase
        of
        $598,560.   This increase was primarily due to a compensation charge
        of $400,000 relating to payments made to Mr. Schumacher (i) as a reimbursement
        of costs and expenses, as well as lost wages and severance benefits, resulting
        from his termination of employment in February 2003, and (ii) as a bonus
        to
        reward Mr. Schumacher for his valuable contributions to the Company and our
        stockholders in the overall restructuring and repositioning of our company
        over
        the past two years. In addition, we provided reimbursement of $94,985 in
        the
        first quarter of 2005 to Mr. Schumacher for certain legal bills incurred
        relative to his termination as Chairman and Chief Executive Officer of PBI
        on
        February 13, 2003.
  *Stock
        Based Compensation*
  In
        conjunction with the Asset Sale on September 14, 2004, the Company’s Board
        of Directors voted to extend the termination date of all stock options granted
        to employees of BBI Diagnostics and BBI Biotech to the later of 90 days from
        the
        closing of the SeraCare transaction or the termination of the contemplated
        tender offer. In accordance with the provisions of FASB Interpretation No.
        44,
        we recognized non-cash stock-based compensation of $281,737 in the third
        quarter
        of 2004.
  There
        were no charges for the nine months ended September 30, 2005.
  *Operating
        Loss from Continuing Operations*
  The
        operating loss of the PCT business was $1,868,563 for the nine months ended
        September 30, 2005 as compared to an operating loss of $1,605,259 for the
        comparable period in 2004. The increase in the operating loss for the nine
        months ended September 30, 2005 compared to the same period of 2004 was
        primarily due to increased general and administrative costs as described
        above,
        together with the establishment of basic infrastructure to support the new
        corporate office.
 23
  *Gain
        on Sale of Securities*
  For
        the
        nine months ended September 30, 2005, we recorded a gain on the sale of 328,986
        shares of our Panacos Pharmaceuticals shares. The shares sold in the nine
        months
        ended September 30, 2005 generated a gain of $2,838,491. We recorded a tax
        liability from the sale of the securities in the nine month period of
        $1,088,360.  As of September 30, 2005, we had a total of 683,934 Panacos
        shares remaining, including shares held in escrow of 151,938.  As
        indicated in our press release of August 9, 2005, we continue to monitor
        the
        stock price and sales volume of Panacos, and may decide to sell additional
        shares from time to time.
  *Other
        Operating (Charges) net*
  The
        non-PCT related activities of PBI Source Scientific, Inc., which reflects
        the activity of Source Scientific, LLC, had an operating loss of $528,285
        for
        the nine months ended September 30, 2005, as compared to an operating loss
        of
        $333,607 for the nine months ended September 30, 2004. The increased loss
        was
        the result of lower revenues caused by a delay in orders and reduced margins
        generated by Source Scientific LLC.
  *Interest
        Income / (Expense)*
  Interest
        income totaled $187,559 for the nine months ended September 30, 2005. 
There was no interest expense for the nine months ended September 30,
        2005.  For the nine months ended September 30, 2004 we had $15,243 of
        interest income offset by $69,453 of interest expense incurred as interest
        payment on a previous line of credit terminated in September 2004. 
Increased interest income was in part the result of interest earned on
        investments from the proceeds associated with the sale of our BBI Diagnostics
        and BBI Biotech business units to SeraCare and interest earned on cash proceeds
        related to the sale of shares in Panacos Pharmaceuticals’ stock.
  Additionally,
        in the nine months ended September 30, 2005, we have recognized the benefit
        of
        accrued interest paid related to the Director / CEO’s loan receivable in the
        amount of $69,453. In 2004, accrued interest related to the loan receivable
        was
        not recognized.
  *Income
        Taxes*
  For
        the
        nine months ended September 30, 2005 we recorded a net tax provision of $457,535
        on income from continuing operations, as compared to a benefit in the nine
        months ended September 30, 2004 of $244,036 related to our operating losses
        from
        continuing operations. We recorded a tax provision of $1,088,360 as a result
        of
        the sale of securities which was somewhat offset by a tax benefit of $630,825
        related to the operating loss for the nine months ending September 30, 2005.
         In 2004, as a result of the sale of certain assets and liabilities to
        SeraCare, and the resulting gain on the sale, we estimated and paid taxes
        of
        approximately $3.2 million.  Historically, we maintained a full valuation
        allowance for our deferred tax assets largely comprised of temporary differences
        in accordance with Statement of Financial Accounting Standards No. 109 and
        in consideration of three consecutive years of losses from continuing
        operations. We elected to record a tax benefit at this time as we anticipate
        utilizing the tax benefit from operating losses to mitigate the tax effect
        related to the gain on sale of Panacos securities sold.
  *Income
        (loss) from discontinued operations*
  The
        amounts associated with the sale of our BBI Diagnostics and BBI Biotech business
        units to SeraCare are reported as discontinued operations in the accompanying
        financial statements, in accordance with paragraphs 30 and 42 of Statement
        of
        Financial Accounting Standards No. 144 “Accounting for the Impairment or
        Disposal of Long-Lived Assets” as previously described above.
  For
        the
        nine months ended September 30, 2005, the net income from discontinued
        operations was $1,995, as compared to net income of $140,946 for the same
        period
        in 2004.  The decrease in net income from discontinued operations is a
        result of operating margin generated from revenues of our former BBI Diagnostics
        and BBI Biotech business units realized and included in the September 2004
        quarter. These businesses are not part of our operations in 2005.
  *Gain
        on Sale of Net Assets Related to Discontinued Operations*
  In
        the
        nine months ended September 30, 2005, we recorded a benefit of $701,699 for
        the
        overpayment of 2004 taxes related to the sale of net assets in 2004.  The
        impact resulted from the favorable treatment of ACE credits, utilization
        of
        installment sale tax treatment related to sale of assets, and tax treatment
        of
        our sale of our 70% interest in Source Scientific LLC.   For the same
        nine month period of 2004, we recorded a benefit for the sale of the BBI
        Diagnostics and BBI Biotech operating units of $15,868,025 net of tax estimates
        of $3,925,200.
   24
  *Net
        Income*
  For
        the
        nine months ended September 30, 2005 we realized net income of $875,361 compared
        to net income for the nine months ended September 30, 2004 of $14,259,931
        for
        the reasons discussed above.
  ***LIQUIDITY
        AND FINANCIAL CONDITION***
  As
        of
        September 30, 2005, our working capital position was $7,134,631 (excluding
        restricted cash of $163,296), a decrease of $13,840,935 from our working
        capital
        position of $20,975,566 as of December 31, 2004. This decrease in working
        capital was primarily a result of the use of cash for the repurchase of shares
        from stockholders as part our tender offer in February 2005.
  Net
        cash
        used in continuing operations for the nine months ended September 30, 2005
        was
        $2,321,346 as compared to net cash used by operations of $1,180,743 for the
        nine
        months ended September 30, 2004. The cash used in operations for the first
        nine
        months of fiscal 2005 was to support on-going operations.
  Net
        cash
        provided by investing activities for the nine months ended September 30,
        2005
        was $2,776,512.  The sale of Panacos shares provided $2,841,510 in the
        third quarter, while funds of $64,998 were utilized to purchase property
        and
        equipment associated with the new corporate headquarters office in West
        Bridgewater, Massachusetts and our new laboratory and office space in
        Gaithersburg, Maryland, along with laboratory equipment for the Gaithersburg
        facility.
  Net
        cash
        used in financing activities for the nine months ended September 30, 2005
        was
        $16,437,342 as compared to cash used in financing activities of $2,416,727
        for
        same period of 2004. In February 2005, we utilized approximately $16.3 million
        to complete our issuer tender offer in which we purchased from stockholders
        5,203,001 shares of our common stock, which included 754,275 shares issued
        upon
        exercise of stock options.
  Net
        cash
        provided by discontinued operations for the nine months ended September 30,
        2005
        was $870,483 as compared to net cash provided from discontinued operations
        of
        $28,225,626 for same period of 2004.  The decrease in net cash from
        discontinued operations in 2005 was the result of the generation of cash
        from
        the sale of net assets in September 2004.
  *Investment
        in Panacos Pharmaceuticals (former V.I. Technologies
        Investment)*
  On
        June 11, 2005, V.I. Technologies, Inc. (“Vitex”) announced that it had
        closed its merger with Panacos Pharmaceuticals, Inc. (“Panacos”), pursuant
        to the Agreement and Plan of Merger dated as of June 2, 2004, as amended on
        November 5, 2004, November 28, 2004, December 8, 2004, and
        February 14, 2005 (the “Merger Agreement”). As a result of the merger and a
        subsequent reverse stock split, we received 1,012,920 shares of Vitex common
        stock in place of our Panacos capital stock. Fifteen percent of Vitex stock
        owned by former owners of Panacos stock, including fifteen percent of the
        Vitex
        common stock owned by us, are being held in escrow per the Merger Agreement.
        On
        September 30, 2005, the closing price of Panacos common stock was $9.74 per
        share as quoted on the Nasdaq National Market. On August 18, 2005, V.I.
        Technologies formerly changed its company name to Panacos Pharmaceuticals
        Inc.
        and changed its trading symbol on the Nasdaq National Market to
“PANC”.
  In
        July
        and August 2005 we sold an aggregate of 328,986 shares of Vitex for which
        we
        received $2,841,510 in cash proceeds, net of charges and commission.  On
        November 3, and November 4, 2005 the Company sold an aggregate of 100,000
        shares
        of Panacos stock for which we received approximately $882,990, net of charges
        and commission.  We continue to hold an additional 431,996 shares of
        Panacos and may receive an additional 151,938 shares which are being held
        in
        escrow until September 2006, per the terms of the Marth 10, 2005 merger between
        Vitex and Panacos Pharmaceuticals.  The closing price per share of Panacos
        common stock as reported on the Nasdaq National Market on November 8, 2005
        was
        $8.83.
  *Related
        Party Transaction*
  As
        of
        September 30, 2005, we evaluated the recoverability of a $1,000,000 loan
        receivable (originating January 1, 2003 at an average interest rate of 6.5%
        per annum) from Mr. Richard T. Schumacher, a Director and our current
        President and Chief Executive Officer, which is reflected on our balance
        sheet
        in stockholders’ equity as of September 30, 2005. Our review included an
        evaluation of the collateral associated with the loan, which consists of
        common
        stock of Pressure BioSciences. In February 2005, Mr. Schumacher repaid
        in full a loan outstanding between an entity controlled by him and a financial
        institution with proceeds from the sale of 130,000 shares of our common stock
        in
        connection with our tender offer completed on February 11, 2005. As a
        result, we currently maintain a first priority security interest in this
        collateral previously held by the financial institution, which currently
        consists of 489,659 shares of common stock of Pressure BioSciences.
 25
  In
        connection with the Company’s evaluation of the recoverability of the loan
        receivable as of September 30, 2005, the Company performed a test for impairment
        of the loan receivable by analyzing the value of the collateral. This test
        included, among other things, a review of the current trading price of the
        Company’s common stock after taking into account factors that may affect the
        Company’s ability to sell such stock in the event it were to foreclose on the
        collateral to repay the loan receivable and any accrued and unpaid interest.
        After performing the impairment test, the Company determined that the loan
        receivable was not impaired. The ultimate value that the Company may recover
        is
        dependent on numerous factors including the Company’s stock price, market
        conditions relative to the value of and ability to sell the collateral, and
        the
        financial status of the Company’s President and Chief Executive Officer. Based
        on the Company’s assessment as of September 30, 2005, the Company estimates that
        the value of the collateral approximates the amount of the recorded loan
        receivable.  If actual market conditions are less favorable, the Company’s
        stock price declines or other factors arise that are significantly different
        than those experienced as of September 30, 2005, an impairment of the loan
        receivable together with associated accrued interest is likely to be
        required.  The Company plans to continue to monitor and test the collateral
        for impairment due in large part to the relatively low trading volume of
        the
        Company’s common stock and recent volatility in our stock price, ranging from a
        low of $2.50 per share to a high of $6.70 per share from July 1, 2005 to
        September 30, 2005.
  **Recent
        Accounting Pronouncements**
  In
        December 2004, the Financial Accounting Standards Board (FASB) issued a revision
        of Statement of Financial Accounting Standards No. 123, “Accounting for
        Stock-Based Compensation” (SFAS 123R). SFAS 123R supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees,” and its related implementation
        guidance and eliminates the alternative to use Opinion 25’s intrinsic value
        method of accounting that was provided in Statement 123 as originally issued.
        Under Opinion 25, issuing stock options to employees generally resulted in
        recognition of no compensation cost. SFAS 123(R) requires all entities recognize
        compensation expense in an amount equal to the fair value of share-based
        payments (e.g. stock options and restricted stock) granted to employees.
        This
        applies to all transactions involving the issuance of our own equity in exchange
        for goods or services, including employee services. Upon adoption of SFAS
        123(R), all stock option awards to employees will be recognized as expense
        in
        the income statement, typically over any related vesting period. SFAS 123(R)
        carried forward the guidance from SFAS 123 for payment transactions with
        non-employees. The Securities and Exchange Commission amended the compliance
        date on April 14, 2005, to require public companies to adopt the standard
        as of the beginning of the first annual period that begins after June 15,
        2005. We will, therefore, be required to adopt SFAS 123(R) in the first quarter
        of 2006.
  SFAS
        123(R) permits public companies to adopt its requirements using one of two
        methods:
  1.
              Modified
                  Prospective Method under which compensation cost is recognized
                  beginning
                  with the effective date (a) based on the requirements of SFAS 123(R)
                  for all share-based payments granted after the effective date and
                  (b) based on the requirements of SFAS 123 for all awards granted to
                  employees prior to the effective date of SFAS 123(R) that remain
                  unvested
                  on the effective date.
  2.
              Modified
                  Retrospective Method which includes the requirements of the modified
                  prospective method described above, but also permits entities to
                  restate
                  based on the amounts previously recognized under SFAS 123 for purposes
                  of
                  pro forma disclosures either (a) all prior periods presented or
                  (b) prior interim periods of the year of
                  adoption.
  At
        this
        time, we have not determined which method of adoption we will use.
 
 In
        May
        2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections”,
        which replaces APB 20, “Accounting Changes”, and SFAS 3, “Reporting Accounting
        Changes in Interim Financial Statements - An Amendment of APB Opinion No.
        28”.
        SFAS 154 provides guidance on the accounting for and the reporting of accounting
        changes and error corrections. It establishes retrospective application,
        or the
        latest practicable date, as the required method for reporting a change in
        accounting principle and the reporting of a correction of an error. SFAS
        154 is
        the required method for reporting a change in accounting principle and the
        reporting of a correction of an error. The Company has adopted SFAS 154 to
        correct an error made during the quarter ended September 30, 2005 and discovered
        during the quarter ended March 31, 2006.
 
 On
        March
        15, 2006, the Company received $1,094,162 from Wells Fargo Corporate Trust
        Escrow Services, representing the remaining principal and interest held in
        escrow from the 2004 sale of the assets and certain liabilities of the BBI
        Core
        Businesses to SeraCare. The receipt of these funds triggered the recognition
        of
        taxable income, accounted for as an installment sale for federal income tax
        purposes. During the financial statement closing process for the quarter
        ended
        March 31, 2006, management determined that a deferred tax liability of
        approximately $220,000 should have been established during the quarter ended
        September 30, 2005, the period in which the Company filed its
        federal income tax return. It was also determined that the Company’s deferred
        tax liability in connection with the unrealized gain on Panacos Pharmaceuticals,
        Inc., should be reduced by approximately $123,000.
 26
  **CRITICAL
        ACCOUNTING POLICIES**
  The
        critical accounting policies we utilized in the preparation of the accompanying
        financial statements are set forth in Part II, Item 6 of our Annual Report
        on
        Form 10-KSB for the year ended December 31, 2004, under the heading
“Management’s Discussion and Analysis of Financial Condition or Plan of
        Operation”.  There have been no material changes to these policies since
        December 31, 2004, except as follows:
  *Investment
        in Marketable Securities*
  The
        Company’s investment in marketable securities reflects its holdings of common
        stock of Panacos Pharmaceuticals Inc. (formerly V.I. Technologies (“Vitex”)), a
        publicly traded company listed on the Nasdaq National Market.  The Company
        held shares in Panacos Pharmaceuticals (Panacos), a private company prior
        to
        its merger
        with Vitex in March 2005, and this investment was reflected on a cost basis
        as
        presented on the December 31, 2004 financial statements.  As a result of
        Vitex’s merger with Panacos Pharmaceuticals in March 2005, and the Company’s
        subsequent receipt of shares of Vitex common stock in exchange for all of
        its
        shares of Panacos, the Company’s investment commencing with the first quarter of
        fiscal 2005 has been accounted for under SFAS 115 “Accounting for Certain
        Investments in Debt and Equity Securities”, as available for sale. At September
        30, 2005, the fair value of the Company’s remaining shares of Panacos common
        stock was approximately $6.7 million based on the closing price of $9.74
        per
        share of Panacos common stock as reported on the Nasdaq National Market on
        September 30, 2005.
  **CONTRACTUAL
        OBLIGATIONS**
  There
        have been no material changes to our contractual obligations and commitments
        from those described in our Annual Report on Form 10-KSB, except that we
        entered
        into a lease agreement dated May 5, 2005 (the “Lease”) with Saul Holdings
        Limited Partnership, pursuant to which have agreed to lease approximately
        2,784
        square feet of office space located at 209 Perry Parkway, Gaithersburg, Maryland
        20877 for a term of twelve months.
  The
        following is a summary of our future contractual obligations as of September
        30,
        2005:
 
 **Payments
                  Due by Period****Contractual
                  Obligations**
              
              **Total**
              
              **Less
                  than**
                **1
                  year**
              
              **More
                  than**
                **1
                  year**Lease
                  for Maryland operating office (1)
              
              $
              42,144
              
              $
              42,144
              
              
              0Obligations
                  relating to Discontinued Operations (2)
              
              
              88,888
              
              
              54,888
              
              
              34,0000**Total
                  Contractual Obligations**
              
              **$**
              **131,032**
              
              **$**
              **97,032**
              
              **$**
              **34,000**
 
 
 (1) 
        On May 5, 2005 we entered into a lease with Saul Holdings Limited Partnership
        for approximately 2,784 square feet of office space located at 209 Perry
        Parkway, Gaithersburg, Maryland 20877 for a term of twelve months.  We will
        pay base annual rent in the amount of $55,680, or $4,640 per month during
        the
        initial term of the Lease, plus $1,245 per month for operating
        expense.
  (2) 
        In December 2000, we exited the clinical laboratory testing services
        segment and in February 2001, we sold the assets of our wholly owned
        subsidiary, BBI Clinical Laboratories, Inc. to Specialty Laboratories, Inc.
        of
        Santa Monica, CA.  Our estimate of remaining short and long term accrued
        liabilities to exit the clinical laboratory testing business is $89,500 as
        of
        September 30, 2005.   See also Note 3b of Notes to Consolidated
        Financial Statements included in Part I, Item 1 of this Form
        10-QSB.
  **FORWARD-LOOKING
        STATEMENTS**
  This
        Quarterly Report on Form 10-QSB contains forward-looking statements which
        involve risks and uncertainties, including statements regarding the Company’s
        plans, objectives, expectations and intentions.  In some cases,
        forward-looking statements are identified by terms such as “may”, “will”,
“should”, “could”, “would”, “expects”, “plans”, “anticipates”, “believes”,
“estimates”, “projects”, “predicts”, “potential”, and similar expressions
        intended to identify forward-looking statements. Such statements include,
        without limitation, statements made regarding the expected recovery and value
        of
        the loan receivable from our President and Chief Executive Officer; our belief
        that we have sufficient liquidity to finance operations through 2006;  the
        amount of cash necessary to operate our business; our ability to raise
        additional capital when and if needed;  our plans and expectations with
        respect to sales of our pressure cycling technology products and services;
        our
        plans and expectations with respect to the use of our available cash; and
        the
        anticipated future financial performance of our company and products. 
These forward-looking statements are only predictions and involve known and
        unknown risks, uncertainties, and other factors that may cause our actual
        results, levels of activity, performance, or achievements to be materially
        different from any future results, levels of activity, performance, or
        achievements expressed or implied by such forward-looking statements. Also,
        these forward-looking statements represent our best estimates and assumptions
        only as of the date of this report.  Except as otherwise required by law,
        we expressly disclaim any obligation or undertaking to release publicly any
        updates or revisions to any forward-looking statement contained in the report
        to
        reflect any change in our expectations or any change in events, conditions,
        or
        circumstances on which any of our forward-looking statements are
        based.
 27
 Factors,
        risks and uncertainties which might cause actual results to differ materially
        from those projected in the forward-looking statements contained herein include
        the following:
  •
              We
                  may require additional capital to further develop our pressure
                  cycling
                  technology products and services and cannot assure that additional
                  capital
                  will be available on acceptable terms or at
                  all.
  •
              Our
                  business may be harmed if we encounter problems, delays, expenses
                  and
                  complications that typically affect early-stage
                  companies.
  •
              Our
                  business is dependent on the success of our pressure cycling technology
                  products and services, which has a limited operating history and
                  has
                  generated substantial losses and only a limited amount of revenues
                  to
                  date.
  •
              Our
                  pressure cycling technology business has a history of operating
                  losses.
  •
              Our
                  pressure cycling technology products and services are new and have
                  limited
                  market awareness or acceptance.
  •
              The
                  sales cycle of our pressure cycling technology products has been
                  lengthy
                  and as a result, we have incurred and may continue to incur significant
                  expenses and we may not generate any significant revenue related
                  to those
                  products.
  •
              If
                  we are unable to protect our patents and other proprietary technology
                  relating to our pressure cycling technology products, our business
                  will be
                  harmed.
  •
              If
                  we infringe on the intellectual property rights of others, our
                  business
                  will be harmed.
  •
              We
                  may be unable to adequately respond to rapid changes in
                  technology.
  •
              The
                  market price of Panacos common stock could decline and we may be
                  unable to
                  sell Panacos shares at such times or prices as we may
                  desire.
  •
              The
                  shares of Panacos common stock currently held in escrow may not
                  be
                  released to us in September 2006.
  •
              We
                  may not be able to compete
                  successfully.
  •
              We
                  currently have very few employees and our future success is dependent
                  on
                  the continued services of Richard T. Schumacher, our President
                  and Chief
                  Executive Officer.
  •
              We
                  rely on third parties for our manufacturing, engineering and other
                  related
                  services.
  •
              In
                  connection with the sale of our BBI Diagnostics and BBI Biotech
                  business
                  units, we continue to be exposed to contingent liabilities up to
                  an amount
                  equal to the purchase price for the BBI Diagnostics and BBI Biotech
                  business units, which could prevent us from pursuing our remaining
                  business operations in the event an indemnification claim is brought
                  against us.
  •
              We
                  may not be able to fully collect the $900,000 in aggregate principal
                  amount of promissory notes, which we received in connection with
                  the sale
                  of 70% of the ownership interests in Source Scientific,
                  LLC.
  •
              We
                  may not be able to fully collect the principal and interest due
                  on a
                  $1,000,000 loan receivable from our President and Chief Executive
                  Officer,
                  which could harm our business and financial
                  condition.
  28
  •
              The
                  market price for our common stock may fluctuate due to low trading
                  volume,
                  and it may be difficult for you to sell your stock at the prices
                  and times
                  you desire.
  •
              Mr. Richard
                  T. Schumacher controls a significant percentage of voting power
                  and may
                  exercise his voting power in a manner adverse to other stockholders’
                  interests.
  •
              Provisions
                  in our charter and by-laws and our stockholders rights plan may
                  discourage
                  or frustrate stockholders’ attempts to remove or replace our current
                  management.
  Certain
        of these and other factors which might cause actual results to differ materially
        from those projected are more fully set forth under the caption “Risk Factors”
in the Company’s Annual Report on Form 10-KSB for the year ended December 31,
        2004 and in the Company’s other reports and statements the Company files from
        time to time with the SEC.
 
 **ITEM
        3.  CONTROLS AND PROCEDURES**
  We
        maintain disclosure controls and procedures that are designed to ensure that
        information required to be disclosed in our Securities Exchange Act reports
        is
        recorded, processed, summarized and reported within the time periods specified
        in the SEC’s rules and forms, and that such information is accumulated and
        communicated to our management, including our President and Chief Executive
        Officer (Principal Executive Officer) and Chief Financial Officer (Principal
        Financial Officer), as appropriate, to allow timely decisions regarding required
        disclosure. In designing and evaluating the disclosure controls and procedures,
        management recognized that any controls and procedures, no matter how well
        designed and operated, can provide only reasonable assurance of achieving
        the
        desired control objectives, as ours are designed to do, and management
        necessarily was required to apply its judgment in evaluating the cost-benefit
        relationship of possible controls and procedures.
  In
        connection with the preparation of our Quarterly Report on Form 10-QSB for
        the quarter ended March 31, 2006, we completed an internal review of our
        tax
        liability associated with the 2004 sale of assets and certain liabilities
        of our
        BBI Core Businesses to SeraCare. As a result of this review, we concluded
        that
        the tax liability related to discontinued operations recorded in the third
        quarter of 2005 was understated by approximately $220,000. In connection
        with
        our internal tax review, we also determined to reduce by approximately $60,000
        the estimate of our deferred tax liability for the unrealized gain from our
        investment in Panacos Pharmaceuticals, Inc. and to increase by approximately
        $23,000 the income tax provision from continuing operations. We therefore
        decided to restate our previously issued financial statements for the year
        ended
        December 31, 2005 and our financial statements for the quarter ended September
        30, 2005 to reflect these changes. We have amended our Annual Report on
        Form 10-KSB for the year ended December 31, 2005 to restate our financial
        results for the year ended December 31, 2005 and this Quarterly Report on
        Form 10-QSB/A for the quarter ended September 30, 2005 restates our
        financial results for the quarter ended September 30, 2005. In connection
        with the filing of these amendments, we carried out a further evaluation,
        as of
        September 30, 2005, under the supervision and with the participation of our
        management, including our President (Principal Executive Officer) and Chief
        Financial Officer (Principal Financial Officer), of the effectiveness of
        the
        design and operation of our disclosure controls and procedures, as defined
        in
        Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.
        Based upon that evaluation, our President (Principal Executive Officer) and
        Chief Financial Officer (Principal Financial Officer) concluded that our
        disclosure controls and procedures were not effective as of September 30,
        2005 in enabling us to record, process, summarize, and report information
        required to be included in our periodic SEC filings within the required time
        period. We believe that the hiring of our new Chief Financial Officer, effective
        as of April 3, 2006, has enabled us to conclude that our disclosure controls
        and
        procedures are now effective.
 
 As
        of
        March 31, 2006, we carried out an evaluation, under the supervision and with
        the
        participation of our management, including our President and Chief Executive
        Officer (Principal Executive Officer) and Chief Financial Officer (Principal
        Financial Officer) of the effectiveness of the design and operation of our
        disclosure controls and procedures, as defined in Rules 13a-15(e) and
        15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation,
        our President and Chief Executive Officer (Principal Executive Officer) and
        Chief Financial Officer (Principal Financial Officer) concluded that our
        disclosure controls and procedures are effective in enabling us to record,
        process, summarize and report information required to be included in our
        periodic SEC filings within the required time period.
 
 Other
        than the changes described above, there have been no changes in our internal
        control over financial reporting that occurred during the period covered
        by this
        Report that have materially affected, or are reasonably likely to materially
        affect, our internal control over financial reporting.
  29
 
 ******PART
          II.   OTHER INFORMATION**
 **ITEM
        1.     LEGAL PROCEEDINGS**
  None.
 
 **ITEM
        2.     UNREGISTERED SALES OF EQUITY
        SECURITES****AND
        USE OF PROCEEDS**
  None
 
 **ITEM
        3.     DEFAULT UPON SENIOR
        SECURITIES**
  None.
 
 ******ITEM
        4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS**
  None.
 
 **ITEM
        5.     OTHER INFORMATION**
  None.
 
 **ITEM
        6.     EXHIBITS**
 
 **Exhibits**
  **Reference**31.1
              Principal
                  Executive Officer Certification Pursuant to Item 601(b)(31) of
                  Regulation
                  S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
                  of
                  2002
              
              Filed
                herewith31.2
              Principal
                  Financial Officer Certification Pursuant to Item 601(b)(31) of
                  Regulation
                  S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
                  of
                  2002
              
              Filed
                herewith32.1
              Principal
                  Executive Officer Certification Pursuant to Item 601(b)(32) of
                  Regulation
                  S-K, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                  of
                  2002
              
              Filed
                herewith32.2
              Principal
                  Financial Officer Certification Pursuant to Item 601(b)(32) of
                  Regulation
                  S-K, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                  of
                  2002
              
              Filed
                herewith
 30
  **SIGNATURES**
  In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  PRESSURE
                  BIOSCIENCES, INC.(Registrant)Date:
                  June 20, 2006
              By:
              /s/
                  Richard T. SchumacherRichard
                  T. SchumacherPresident,
                  Chief Executive Officer and TreasurerBy:
              /s/
                  Edward H. MylesEdward
                  H. MylesVice
                  President of Finance & Chief Financial Officer(Principal
                  Financial and Accounting Officer)