0001493152-20-015327.txt : 20200812 0001493152-20-015327.hdr.sgml : 20200812 20200812152101 ACCESSION NUMBER: 0001493152-20-015327 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 45 CONFORMED PERIOD OF REPORT: 20200630 FILED AS OF DATE: 20200812 DATE AS OF CHANGE: 20200812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVECTUS BIOPHARMACEUTICALS, INC. CENTRAL INDEX KEY: 0000315545 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 900031917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36457 FILM NUMBER: 201095277 BUSINESS ADDRESS: STREET 1: 10025 INVESTMENT DRIVE STREET 2: SUITE 250 CITY: KNOXVILLE STATE: TN ZIP: 37932 BUSINESS PHONE: 865-769-4011 MAIL ADDRESS: STREET 1: 10025 INVESTMENT DRIVE STREET 2: SUITE 250 CITY: KNOXVILLE STATE: TN ZIP: 37932 FORMER COMPANY: FORMER CONFORMED NAME: PROVECTUS PHARMACEUTICALS INC DATE OF NAME CHANGE: 20020417 FORMER COMPANY: FORMER CONFORMED NAME: ZAMAGE DIGITAL IMAGING INC DATE OF NAME CHANGE: 20011126 FORMER COMPANY: FORMER CONFORMED NAME: SPM GROUP INC DATE OF NAME CHANGE: 19920703 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2020

 

or

 

[  ] 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 001-36457

 

PROVECTUS BIOPHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   90-0031917

(State or other jurisdiction
of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

     

10025 Investment Drive, Suite 250

Knoxville, Tennessee

  37932
(Address of principal executive offices)   (Zip Code)

 

866-594-5999

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None   N/A   N/A

 

Indicate by check mark whether the registrant (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. [X] Yes [  ] No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] Yes [  ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
       
Non-accelerated filer [X] Smaller reporting company [X]
       
    Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [  ] Yes [X] No

 

The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of August 11, 2020, was 394,362,475.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
PART I - FINANCIAL INFORMATION  
   
Cautionary Note Regarding Forward-Looking Statements 1
Item 1. Financial Statements (unaudited) 2
Condensed Consolidated Balance Sheets 2
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Statements of Comprehensive Loss 4
Condensed Consolidated Statements of Changes in Stockholders’ Deficiency 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
Item 4. Controls and Procedures 22
   
PART II - OTHER INFORMATION  
   
Item 1. Legal Proceedings 23
Item 1A. Risk Factors 23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 23
Item 3. Defaults Upon Senior Securities 24
Item 4. Mine Safety Disclosures 24
Item 5. Other Information 24
Item 6. Exhibits 24
   
SIGNATURES 25

 

 

 

 

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined under U.S. federal securities laws. These statements reflect management’s current knowledge, assumptions, beliefs, estimates, and expectations. These statements also express management’s current views of future performance, results, and trends and may be identified by their use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “strategy,” “will,” and other similar terms. Forward-looking statements are subject to a number of risks and uncertainties that could cause our actual results to materially differ from those described in the forward-looking statements. Readers should not place undue reliance on forward-looking statements. Such statements are made as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update such statements after this date, unless otherwise required by law.

 

Risks and uncertainties that could cause our actual results to materially differ from those described in forward-looking statements include those discussed in our filings with the U.S. Securities and Exchange Commission (the “SEC”) (including those described in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2019 and Item 1A of Part II of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2020), and:

 

 

Our potential profits from the sales of investigational drug products PV-10®, PH-10®, and/or any other halogenated xanthene-based drug products (if and when approved); and licensing, milestone, royalty, and/or other payments related to these investigational drug products and/or the Company’s liquidation, dissolution or winding up, or any sale, lease, conveyance, or other disposition of any intellectual property relating to halogenated xanthene-based investigational drug products and/or drug substances,

     
  Our ability to raise additional capital, including but not limited to our ability to close on additional tranches of the 2020 Financing pursuant to the 2020 Term Sheet that our Board approved effective as of December 31, 2019, and
     
  The widespread outbreak of an illness or communicable/infectious disease, such as severe acute respiratory syndrome coronavirus 2, and/or a public health crisis, could disrupt our business and adversely affect our operations and financial condition.

 

1

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

PROVECTUS BIOPHARMACEUTICALS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,
2020
   December 31,
2019
 
   (Unaudited)     
Assets          
           
Current Assets:          
Cash and cash equivalents  $1,483,214   $590,706 
Short-term receivables - legal fees, settlement and other, net   3,777    55,058 
Prepaid expenses   142,659    350,249 
           
Total Current Assets   1,629,650    996,013 
          
Equipment and furnishings, less accumulated depreciation of $71,676 and $64,630, respectively   51,338    58,384 
Operating lease right-of-use asset   157,599    194,400 
Patents, net of accumulated amortization of $11,715,455 and $11,487,338, respectively   -    228,107 
           
Total Assets  $1,838,587   $1,476,904 
           
Liabilities and Stockholders’ Deficiency          
           
Current Liabilities:          
Accounts payable - trade  $1,457,729   $1,125,890 
Other accrued expenses   1,376,008    1,255,266 
Current portion of accrued interest   2,114,852    65,333 
Current portion of accrued interest - related parties   1,494,357    - 
Current portion of note payable   23,438    - 
Current portion of convertible notes payable   15,872,000    500,000 
Current portion of convertible notes payable - related parties   6,770,000    - 
Current portion of operating lease liability   81,149    76,423 
           
Total Current Liabilities   29,189,533    3,022,912 
           
Accrued interest, non-current portion   -    1,501,864 
Accrued interest, non-current portion - related parties   -    1,226,582 
Note payable, non-current portion   39,062    - 
Convertible notes payable, non-current portion   -    12,997,000 
Convertible notes payable, non-current portion - related parties   -    6,670,000 
Operating lease liability, non-current portion   86,974    130,658 
           
Total Liabilities   29,315,569    25,549,016 
           
Commitments and contingencies (Note 9)          
           
Stockholders’ Deficiency:          
Preferred stock; par value $0.001 per share; 25,000,000 shares authorized; Series B Convertible Preferred Stock; 240,000 shares designated; 100 shares issued and outstanding at June 30, 2020 and December 31, 2019; aggregate liquidation preference of $3,500 at June 30, 2020 and December 31, 2019   -    - 
Common stock; par value $0.001 per share; 1,000,000,000 shares authorized; 390,714,475 and 389,889,475 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively   390,714    389,889 
Additional paid-in capital   209,421,800    209,378,835 
Accumulated other comprehensive loss   (30,802)   (24,008)
Accumulated deficit   (237,258,694)   (233,816,828)
           
Total Stockholders’ Deficiency   (27,476,982)   (24,072,112)
           
Total Liabilities and Stockholders’ Deficiency  $1,838,587   $1,476,904 

 

See accompanying notes to condensed consolidated financial statements.

 

2

 

 

PROVECTUS BIOPHARMACEUTICALS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2020   2019   2020   2019 
             
Operating Expenses:                    
Research and development  $696,454   $1,208,324   $1,605,900   $2,245,655 
General and administrative   514,394    631,063    1,053,188    1,390,316 
Total Operating Expenses   1,210,848    1,839,387    2,659,088    3,635,971 
                     
Total Operating Loss   (1,210,848)   (1,839,387)   (2,659,088)   (3,635,971)
Other Income/(Expense):                    
EIDL grant   3,000    -    3,000    - 
Gain on settlement of lawsuits   -    -    -    675,000 
Research and development tax credit   113    (1,131)   26,364    82,941 
Investment and interest income   3,334    19,650    3,413    21,905 
Interest expense   (410,404)   (356,451)   (815,555)   (691,024)
Total Other Income/(Expense)   (403,957)   (337,932)   (782,778)   88,822 
                     
Net Loss  $(1,614,805)  $(2,177,319)  $(3,441,866)  $(3,547,149)
                     
Basic and Diluted Loss Per Common Share  $(0.00)  $(0.01)  $(0.01)  $(0.01)
                     
Weighted Average Number of Common Shares Outstanding - Basic and Diluted   390,714,200    384,773,639    390,635,608    384,769,219 

 

See accompanying notes to condensed consolidated financial statements.

 

3

 

 

PROVECTUS BIOPHARMACEUTICALS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2020   2019   2020   2019 
             
Net Loss  $(1,614,805)  $(2,177,319)  $(3,441,866)  $(3,547,149)
Other Comprehensive Income (Loss):                    
Foreign currency translation adjustments   2,233    (2,496)   (30,802)   (24,859)
Total Comprehensive Loss  $(1,612,572)  $(2,179,815)  $(3,472,668)  $(3,572,008)

 

See accompanying notes to condensed consolidated financial statements.

 

4

 

 

PROVECTUS BIOPHARMACEUTICALS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY

(Unaudited)

 

FOR THE SIX MONTHS ENDED JUNE 30, 2020
 
               Accumulated         
   Preferred Stock       Additional   Other         
   Series B   Common Stock   Paid-In   Comprehensive   Accumulated     
   Shares   Amount   Shares   Amount   Capital   Loss   Deficit   Total 
                                 
Balance at January 1, 2020   100   $-    389,889,475   $389,889   $209,378,835   $(24,008)  $(233,816,828)  $(24,072,112)
                                         
Common stock issued upon exercise of warrants   -    -    800,000    800    41,840    -    -    42,640 
Comprehensive loss:                  -                     
Net loss   -    -    -    -    -    -    (1,827,061)   (1,827,061)
Other comprehensive loss   -    -    -    -    -    (9,027)   -    (9,027)
                                         
Balance at March 31, 2020   100   $-    390,689,475   $390,689   $209,420,675   $(33,035)  $(235,643,889)  $(25,865,560)
                                         
Common stock issued for services   -    -    25,000    25    1,125    -    -    1,150 
Warrants issued for services   -    -    -    -    -    -    -    - 
Comprehensive loss:                                        
Net loss   -    -    -    -    -    -    (1,614,805)   (1,614,805)
Other comprehensive income   -    -    -    -    -    2,233    -    2,233 
                                         
Balance at June 30, 2020   100   $-    390,714,475   $390,714   $209,421,800   $(30,802)  $(237,258,694)  $(27,476,982)

 

FOR THE SIX MONTHS ENDED JUNE 30, 2019
 
               Accumulated         
   Preferred Stock       Additional   Other         
   Series B   Common Stock   Paid-In   Comprehensive   Accumulated     
   Shares   Amount   Shares   Amount   Capital   Loss   Deficit   Total 
                                 
Balance at January 1, 2019   100   $-    384,614,528   $384,615   $209,092,187   $-   $(226,894,291)  $(17,417,489)
                                         
Common stock issued upon exercise of warrants   -    -    100,000    100    5,230    -    -    5,330 
Comprehensive loss:                  -                     
Net loss   -    -    -    -    -    -    (1,369,830)   (1,369,830)
Other comprehensive loss   -    -    -    -    -    (22,363)   -    (22,363)
                                         
Balance at March 31, 2019   100   $-    384,714,528   $384,715   $209,097,417   $(22,363)  $(228,264,121)  $(18,804,352)
                                         
Common stock issued for services   -    -    191,590    191    8,771    -    -    8,962 
Warrants issued for services   -    -    -    -    10,113    -    -    10,113 
Comprehensive loss:                                        
Net loss   -    -    -    -    -    -    (2,177,319)   (2,177,319)
Other comprehensive loss   -    -    -    -    -    (2,496)   -    (2,496)
                                         
Balance at June 30, 2019   100   $-    384,906,118   $384,906   $209,116,301   $(24,859)  $(230,441,440)  $(20,965,092)

 

See accompanying notes to condensed consolidated financial statements.

 

5

 

 

PROVECTUS BIOPHARMACEUTICALS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   For the Six Months Ended 
   June 30, 
   2020   2019 
         
Cash Flows From Operating Activities:          
Net loss  $(3,441,866)  $(3,547,149)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock-based compensation   1,150    19,075 
Noncash lease expense   36,801    - 
Depreciation   7,046    42,622 
Amortization of patents   228,107    335,560 
Changes in operating assets and liabilities          
Short term receivables   47,653    49,863 
Prepaid expenses   207,590    127,794 
Accounts payable - trade   332,134    (1,757,954)
Other accrued expenses   120,817    481,936 
Operating lease liability   (38,958)   - 
Accrued interest expense   815,430    691,024 
           
Net Cash Used In Operating Activities   (1,684,096)   (3,557,229)
           
Cash Flows From Financing Activities:          
Proceeds from issuance of convertible notes payable   2,375,000    4,825,000 
Proceeds from issuance of convertible notes payable - related parties   100,000    25,000 
Proceeds from note payable   62,500    - 
Proceeds from exercise of warrants   42,640    5,330 
Net Cash Provided By Financing Activities   2,580,140    4,855,330 
           
Effect of Exchange Rate Changes on Cash   (3,536)   (24,859)
           
Net Increase In Cash and Cash Equivalents   892,508    1,273,242 
           
Cash and Cash Equivalents, Beginning of Period   590,706    50,986 
           
Cash and Cash Equivalents, End of Period  $1,483,214   $1,324,228 
           
Supplemental Disclosures of Cash Flow Information:          
Cash paid during the period for:          
Interest  $-   $- 
Income taxes  $-   $- 
           
Non-cash investing and financing activities:          
Offset of related party receivable and payable  $-   $252,750 

 

See accompanying notes to condensed consolidated financial statements.

 

6

 

 

PROVECTUS BIOPHARMACEUTICALS, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1. Business Organization, Nature of Operations and Basis of Presentation

 

Provectus Biopharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, “Provectus” or the “Company”), is a clinical-stage biotechnology company that is developing immunotherapy medicines based on an entire, wholly-owned family of small molecules called halogenated xanthenes. The Company’s proprietary lead molecule is current Good Manufacturing Practice (“cGMP”) rose bengal disodium (“RBD”).

 

  Oncology: PV-10, an investigational autolytic cancer immunotherapy administered by intralesional (“IL”) injection and formulation of cGMP RBD, is undergoing clinical study for adult solid tumor cancers, like melanoma and gastrointestinal (“GI”) tumors (including hepatocellular carcinoma (“HCC”), colorectal cancer metastatic to the liver (“mCRC”), neuroendocrine tumors (“NET”) metastatic to the liver (“mNET”), and uveal melanoma metastatic to the liver (“mUM”), among others). Orphan drug designation status has been granted to IL PV-10 by the U.S. Food and Drug Administration (the “FDA”) for metastatic melanoma in 2006, HCC in 2011, and ocular melanoma (including uveal melanoma) in 2019.
     
  Pediatric Oncology: IL PV-10 is also undergoing preclinical study for pediatric solid tumor cancers (including neuroblastoma, Ewing sarcoma, rhabdomyosarcoma, and osteosarcoma). Orphan drug designation status has been granted to IL PV-10 by the FDA for neuroblastoma in 2018.
     
  Hematology: A new systemically-administered formulation of cGMP RBD is undergoing preclinical study for pediatric blood cancers (including leukemia).
     
  Virology: A new systemically-administered formulation of cGMP RBD is undergoing preclinical study for the novel strain of coronavirus (“CoV”), severe acute respiratory syndrome (“SARS”) CoV 2 (“SARS-CoV-2”).
     
  Dermatology: PH-10, an investigational immuno-dermatology agent administered as a topical (“top.”) gel and formulation of cGMP RBD, is undergoing clinical study for inflammatory dermatoses (including psoriasis and atopic dermatitis).

 

To date, the Company has not generated any revenues or profits from planned principal operations. The Company’s activities are subject to significant risks and uncertainties, including failing to successfully develop and license or commercialize the Company’s prescription drug candidates.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information pursuant to Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be reviewed in conjunction with the Company’s audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2019 filed with the SEC on March 5, 2020. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

 

SARS-CoV-2 was reportedly first identified in late-2019 and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the SARS-CoV-2 pandemic, many companies have experienced disruptions of their operations and the markets they serve. The Company has taken several temporary precautionary measures intended to help ensure the well-being of its employees and contractors and to minimize business disruption. The Company considered the impact of SARS-CoV-2 pandemic on its business and operational assumptions and estimates, and determined there were no material adverse impacts on the Company’s results of operations and financial position at June 30, 2020.

 

The full extent of the SARS-CoV-2 pandemic impacts on the Company’s operations and financial condition is uncertain. A prolonged SARS-CoV-2 pandemic could have a material adverse impact on the Company’s business and financial results, including the timing and ability of the Company to initiate and/or complete current and/or future preclinical studies and/or clinical trials; disrupt the Company’s regulatory activities; and/or have other adverse effects on the Company’s clinical development.

 


7

 

  

2. Liquidity and Going Concern

 

The Company’s cash and cash equivalents were $1,483,214 at June 30, 2020. The Company continues to incur significant operating losses. Management expects that significant on-going operating expenditures will be necessary to successfully implement the Company’s business plan and develop and market its products. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued. Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to develop IL PV-10, top. PH-10, and/or any other halogenated xanthene-based drug products, and to raise additional capital.

 

During the six months ended June 30, 2020, the Company received a loan of $62,500 under the Paycheck Protection Program (“PPP”) (see Note 4) and received a grant of $3,000 from the Economic Injury Disaster Loan (“EIDL”) under the CARES Act. The grant was recognized as other income during the three and six months ended June 30, 2020.

 

Subsequent to June 30, 2020, the Company received an aggregate $194,438 in connection with a warrant exercise. The Company also received an aggregate $450,000 in connection with the 2020 Financing. See Note 10 – Subsequent Events.

 

The Company plans to access capital resources through possible public or private equity offerings, including the 2020 Financing (as defined in Note 4), exchange offers, debt financings, corporate collaborations or other means. In addition, the Company continues to explore opportunities to strategically monetize its lead drug candidates, IL PV-10 and top. PH-10, through potential co-development and licensing transactions, although there can be no assurance that the Company will be successful with such plans. The Company has historically been able to raise capital through equity offerings, although no assurance can be provided that it will continue to be successful in the future. If the Company is unable to raise sufficient capital through the 2020 Financing or otherwise, it will not be able to pay its obligations as they become due.

 

The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, the Company cannot assure you that it will be successful in developing further, co-developing, licensing, and/or commercializing IL PV-10, top. PH-10, and/or any other halogenated xanthene-based drug products of the Company, or entering into any commercial financial transaction. Moreover, even if the Company is successful in improving its current cash flow position, the Company nonetheless plans to seek additional funds to meet its long-term requirements in 2020 and beyond. The Company anticipates that these funds will otherwise come from the proceeds of private placement transactions, including the 2020 Financing, the exercise of existing warrants and outstanding stock options, or public offerings of debt or equity securities. While the Company believes that it has a reasonable basis for its expectation that it will be able to raise additional funds, the Company cannot assure you that it will be able to complete additional financing in a timely manner. In addition, any such financing may result in significant dilution to stockholders.

 

8

 

 

 

3. Critical Accounting Policies

 

Since the date the Company’s December 31, 2019 consolidated financial statements were issued in its 2019 Annual Report, there have been no material changes to the Company’s significant accounting policies, except as disclosed below.

 

Recently Issued Accounting Standards

 

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-03, Codification Improvements to Financial Instruments. There are seven issues addressed in this update. Issues 1 – 5 were clarifications and codifications of previous updates. Issue 3 relates only to depository and lending institutions and therefore would not be applicable to the Company. Issue 6 was a clarification on determining the contractual term of a net investment in a lease for purposes of measuring expected credit losses, an issue not applicable to the Company. Issue 7 relates to the regaining control of financial assets sold and the recordation of an allowance for credit losses. The amendment related to issues 1, 2, 4 and 5 became effective immediately upon adoption of the update. Issue 3 becomes effective for fiscal years beginning after December 15, 2019. Issues 6 and 7 become effective on varying dates that relate to the dates of adoption of other updates. Management’s initial analysis is that it does not believe the new guidance will substantially impact the Company’s financial statements. The Company adopted certain provisions which have become effective during fiscal 2020 within ASU 2020-03 and its adoption did not have a material impact on the Company’s condensed consolidated financial statements and financial statement disclosures. The Company is currently evaluating the effect that adopting the remaining new accounting guidance will have on its condensed consolidated financial statements and related disclosures.

 

The CARES Act

 

On March 27, 2020, President Trump signed the CARES Act into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. Under ASC 740 of GAAP, the effects of new legislation are recognized upon enactment. Accordingly, the CARES Act is effective beginning in the quarter ended March 31, 2020. The adoption of the CARES Act provisions did not have a material impact on the Company’s condensed consolidated financial statements.

 

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4. Convertible Notes Payable

 

2020 Financing

 

On December 31, 2019, the Board approved a Definitive Financing Term Sheet (the “2020 Term Sheet”), which sets forth the terms under which the Company will use its best efforts to arrange for financing of a maximum of $20,000,000 (the “2020 Financing”). The 2020 Financing will be in the form of secured convertible loans (“Loans”) from investors that will be evidenced by convertible promissory notes (the “2020 Notes”). Subject to the terms and conditions of the 2020 Term Sheet, the Company will use its best efforts to arrange for the 2020 Financing, which amounts will be obtained in several tranches. The proceeds from the 2020 Financing will be used to fund the Company’s clinical development program, as currently constituted and envisioned, and to fund the Company’s general and administrative expenses.

 

Since the 2020 Financing was launched and through June 30, 2020, the Company had received aggregate Loans of $2,575,000.

 

The Series D Preferred Stock

 

As of June 30, 2020, and through the date of filing, the Series D Preferred Stock had not been designated by the Board. Per the terms of the notes issued in connection with the 2017 and 2020 Financings, if the Company has not designated the Series D Preferred Stock or if an insufficient number of Series D Preferred shares exist upon a conversion by a note holder, then the outstanding loans will continue to accrue interest at a rate of 8% per annum until which time the Company has designated a sufficient number of Series D Preferred shares. As a result, the Company did not analyze the notes for a potential beneficial conversion feature as the definition of a firm commitment has not been met since the notes were not convertible as of their respective dates of issuance or as of June 30, 2020.

 

Convertible Notes Payable – Related Parties

 

During the six months ended June 30, 2020, the Company entered into additional related party 2020 Notes in the aggregate principal amount of $100,000. As of June 30, 2020, the Company had borrowed $100,000 under these notes.

 

Convertible Notes Payable – Non-Related Parties

 

During the six months ended June 30, 2020, the Company entered into additional non-related party 2020 Notes in the aggregate principal amount of $2,375,000. As of June 30, 2020, the Company had borrowed $2,475,000   under these notes.

 

Notes Payable

 

On April 20, 2020, the Company received a $62,500 loan under the CARES Act PPP (the “PPP Loan”). The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times certain of the borrower’s average monthly payroll expenses. The loan principal and accrued interest are forgivable, as long as the borrower uses loan proceeds for eligible uses during a specified period following disbursement, such as payroll, benefits, rent, and utilities, and maintains specified headcount and payroll thresholds. If any portion of a PPP Loan is not forgiven, the unforgiven portion is payable over two years at an interest rate of 1%, with a deferral of payments for the first seven months. The Company intends to use PPP Loan proceeds in a manner that it believes presently qualifies for full forgiveness. We cannot provide assurance that the PPP Loan will be forgiven in full As of June 30, 2020, the Company had not applied for forgiveness of the PPP Loan.   Once an amount is forgiven under the PPP Loan, the Company intends to recognize a gain on forgiveness of note payable in the period in which it obtained forgiveness.

 

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5. Related Party Transactions

 

During the three and six months ended June 30, 2020, the Company paid Mr. Bruce Horowitz (Capital Strategists) consulting fees of $11,200 and $63,600, respectively, for services rendered. Accrued director fees for Mr. Horowitz as of June 30, 2020 were $37,500.

 

During the three and six months ended June 30, 2019, the Company paid Mr. Bruce Horowitz (Capital Strategists) consulting fees of $61,200 and $171,200, respectively, for services rendered. Accrued director fees for Mr. Horowitz as of June 30, 2019 were $37,500. Mr. Horowitz serves as both COO and a Director.

 

See Note 4 and Note 6 for details of other related party transactions.

 

6. Receivables

 

The following table summarizes the receivables at June 30, 2020 and December 31, 2019:

 

   June 30, 2020 
   Tax Credit   Legal Fees   Settlement   Total 
                 
Provectus Australia Tax Credit  $3,777   $-   $-   $3,777 
Gross receivable   -    455,500    1,649,043    2,104,543 
Reserve for uncollectibility   -    (455,500)   (1,649,043)   (2,104,543)
Net receivable  $3,777   $-   $-   $3,777 

 

   December 31, 2019 
   Tax Credit   Legal Fees   Settlement   Total 
                 
Provectus Australia Tax Credit  $55,058   $-   $-   $55,058 
Gross receivable   -    455,500    1,649,043    2,104,543 
Reserve for uncollectibility   -    (455,500)   (1,649,043)   (2,104,543)
Net receivable  $55,058   $-   $-   $55,058 

 

7. Stockholders’ Deficiency

 

Common Stock

 

During the six months ended June 30, 2020, warrant holders exercised warrants to purchase an aggregate of 800,000 shares of common stock at an exercise price of $0.0533 per share. In connection with these exercises, the Company received aggregate cash proceeds of $42,640 and issued 800,000 shares of common stock to the holders. Subsequent to June 30, 2020, the Company received an aggregate $194,438 in connection with a warrant exercise. See Note 10 – Subsequent Events.

 

During the six months ended June 30, 2020, the Company issued an aggregate of 25,000 shares of immediately vested restricted common stock to a consultant with an issuance date fair value of $1,150, which was recognized immediately.

 

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8. Leases

 

The Company currently leases 4,500 square feet of corporate office space in Knoxville, Tennessee through an operating lease agreement for a term of five years ending on June 30, 2022. Payments range from approximately $7,300 to $7,800 per month.

 

Total operating lease expense for the three months ended June 30, 2020 was $22,332, of which, $14,888 was included within research and development and $7,444 was included within general and administrative expenses on the condensed consolidated statement of operations. Total operating lease expense for the three months ended June 30, 2019 was $22,329, of which, $14,886 was included within research and development and $7,443 was included within general and administrative expenses on the condensed consolidated statement of operations.

 

Total operating lease expense for the six months ended June 30, 2020 was $43,634, of which, $29,090 was included within research and development and $14,544 was included within general and administrative expenses on the condensed consolidated statement of operations. Total operating lease expense for the six months ended June 30, 2019 was $57,134, of which, $38,089 was included within research and development and $19,045 was included within general and administrative expenses on the condensed consolidated statement of operations. 

 

As of June 30, 2020, the Company had no leases that were classified as a financing lease. As of June 30, 2020, the Company did not have additional operating and financing leases that have not yet commenced. 

 

A summary of the Company’s right-of-use assets and liabilities is as follows:

 

  

Six Months Ended June 30, 2020

 
     
Cash paid for amounts included in the measurement of lease liabilities:     
Operating cash flows used in operating leases  $44,882 
      
Right-of-use assets obtained in exchange for lease obligations:     
Operating leases  $- 
      
Weighted Average Remaining Lease Term     
Operating leases   2.0 Years 
      
Weighted Average Discount Rate     
Operating leases   8.0%

 

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Future minimum payments under the Company’s non-cancellable lease obligations as of June 30, 2020 were as follows:

 

Years  Amount 
     
2020   45,784 
2021   92,471 
2022   46,687 
Total future minimum lease payments   184,943 
Less: amount representing imputed interest   (16,819)
Total  $168,123 

 

9. Commitments, Contingencies and Litigation

 

Culpepper Travel Expenses and Related Collection Efforts

 

On December 27, 2016, the then-Board of Directors (the “then-Board”) unanimously voted to terminate then-interim Chief Executive Officer, then-Chief Operating Officer, and former Chief Financial Officer, Peter Culpepper (“Culpepper”), effective immediately, from all positions he held with the Company and each of its subsidiaries, “for cause,” in accordance with the terms of the Amended and Restated Executive Employment Agreement entered into by Culpepper and the Company on April 28, 2014 (the “Culpepper Employment Agreement”), based on the results of the investigation conducted by the Audit Committee of the then-Board regarding improper expense reimbursements to Culpepper.

 

The Company took the position that under the terms of the Culpepper Employment Agreement, Culpepper is owed no severance payments as a result of his termination “for cause” as that term is defined in the Culpepper Employment Agreement. Furthermore, Culpepper is no longer entitled to the 2:1 credit under the Stipulated Settlement Agreement and Mutual Release in the Kleba Derivative Lawsuit Settlement (the “Derivative Lawsuit Settlement”) such that the total $2,240,000 owed by Culpepper pursuant to the Derivative Lawsuit Settlement plus Culpepper’s proportionate share of the litigation cost in the amount of $227,750, less the amount that he repaid as of December 31, 2016, is immediately due and payable. The Company sent Culpepper a notice of default in January 2017 for the total amount he owes the Company and is in the process of pursuing these claims in accordance with the alternative dispute resolution provision of the Culpepper Employment Agreement. The Company has established a reserve of $2,104,543 as of June 30, 2020 and December 31, 2019, which amount represents the amount the Company currently believes Culpepper owes to the Company under the Derivative Lawsuit Settlement (excluding the amount of attorneys’ fees incurred in enforcing the terms of the Derivative Lawsuit Settlement), while the Company pursues collection of this amount.

 

Culpepper disputed that he was terminated “for cause” under the Culpepper Employment Agreement. On June 28, 2017, pursuant to the alternative dispute resolution provisions of that agreement, the Company and Culpepper participated in a mediation of their dispute. Having reached no resolution during the mediation, the parties participated in arbitration under the commercial rules of the American Arbitration Association, arbitrating Culpepper’s claim against the Company for severance and the Company’s claims against Culpepper for improper expense reimbursements and amounts Culpepper owed the Company under the Derivative Lawsuit Settlement. On September 12, 2018, the arbitrator issued his final award in favor of the Company.

 

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On October 4, 2018, the Company filed a petition with the Chancery Court for Davidson County, Tennessee to confirm the arbitration award. On January 23, 2019, the Chancery Court entered an order confirming the arbitrator’s award. On February 20, 2019, Culpepper filed a motion to alter or amend the Chancery Court’s judgment. On March 22, 2019, the Chancery Court upheld the arbitration award in favor of the Company.

 

On April 16, 2019, Culpepper filed a Notice of Appeal with the Tennessee Court of Appeals regarding the Chancery Court’s judgment. The Company and Culpepper submitted their respective court of appeal briefs on November 12, 2019 and December 3, 2019, respectively. Oral arguments were held on January 7, 2020. On April 14, 2020, the Court of Appeals affirmed the Chancery Court’s judgment and awarded court costs to the Company.

 

On June 16, 2020, Culpepper filed an application to the Supreme Court of Tennessee for permission to appeal the Court of Appeals’ final decision. On June 30, 2020, the Company filed an answer to the Supreme Court in opposition to Culpepper’s application for permission to appeal. On August 5, 2020, the Supreme Court denied Culpepper’s application.

 

10. Subsequent Events

 

Convertible Notes Payable

 

Subsequent to June 30, 2020, the Company entered into a 2020 Note with a non-related party in the aggregate principal amount of $450,000 in connection with a 2nd Loan received by the Company for the same amount.

 

Exercise of Warrants

 

Subsequent to June 30, 2020, a warrant holder exercised warrants to purchase an aggregate of 3,648,000 shares of common stock at $0.0533 per share. In connection with this exercise, the Company received aggregate cash proceeds of $194,438.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to our results of operations and our financial condition together with our consolidated subsidiaries. This discussion and analysis should be read in conjunction with the accompanying unaudited financial statements and our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 5, 2020 (“2019 Form 10-K”), which includes additional information about our critical accounting policies and practices and risk factors. Historical results and percentage relationships set forth in the statement of operations, including trends which might appear, are not necessarily indicative of future operations.

 

Overview

 

Provectus is a clinical-stage biotechnology company developing immunotherapy medicines based on an entire, wholly-owned family of chemical small molecules called halogenated xanthenes. The Company’s proprietary lead molecule is cGMP RBD. IL PV-10, the first small molecule autolytic immunotherapy and a formulation of cGMP RBD, can induce immunogenic cell death (“ICD”), and is undergoing clinical study for adult solid tumor cancers, such as melanoma and GI tumors (e.g., HCC, mCRC, mNET, mUM), and preclinical study for pediatric solid tumor cancers (e.g., neuroblastoma, Ewing sarcoma, rhabdomyosarcoma, osteosarcoma). Topically-administered PH-10, an immune-modulatory agent and formulation of cGMP RBD, is undergoing clinical study for inflammatory dermatoses (e.g., psoriasis, atopic dermatitis). New systemically-administered formulations of cGMP RBD are being investigated for hematology (e.g., acute myeloid leukemia, acute monocytic leukemia) and virology (e.g., SARS-CoV-2). 

 

The SARS-CoV-2 pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact our ability to raise additional funds and may also impact the volatility of our stock price and trading in our stock. Moreover, the pandemic has also significantly impacted economies worldwide, which could result in adverse effects on our business and operations. We cannot be certain what the overall impact of the SARS-CoV-2 pandemic will be on our business. It has the potential to adversely affect our business, financial condition, results of operations, and prospects. We have taken several temporary precautionary measures intended to help ensure the well-being of our employees and contractors and to minimize disruption to our business. We considered the impact of SARS-CoV-2 pandemic on our business and operational assumptions and estimates, and determined there were no material adverse impacts on our results of operations and financial position at June 30, 2020.

 

Our Science and Technology

 

Oncology. IL PV-10 drug product is Provectus’ cGMP injectable formulation of the Company’s pharmaceutical-grade (cGMP) RBD (4,5,6,7-tetrachloro-2’,4’,5’,7’-tetraiodofluorescein disodium salt) drug substance. RBD selectively accumulates in the lysosomes of cancer cells. Cancer cells, particularly advanced cancer cells, are very dependent on effective lysosomal functioning (Piao et al., Ann N Y Acad Sci 2016). Cancer progression and metastasis are associated with lysosomal compartment changes (Nishimura et al., Pathol Oncol Res 1998; Gocheva et al., Genes Dev 2006), which are closely correlated with, among other things, invasive growth, angiogenesis, and drug resistance (Fahrenbacher et al., Cancer Res 2005).

 

Lysosomes are the central organelles for intracellular degradation of biological macromolecules and organelles. Discovered by Christian de Duve, M.D. in 1955, lysosomes have been linked with a number of biological processes like cell death, inflammasome activation, and immune response. In 1959, Dr. de Duve described lysosomes as “suicide bags,” because their rupture led to cell death and tissue autolysis. Lysosomes have been shown to play a role in each of the primary pathways of cell death, which are apoptosis, autophagy, and necrosis. He was awarded the Nobel Prize in 1974 for discovering and characterizing lysosomes.

 

Provectus showed that RBD selectively accumulates in the lysosomes of cancer cells and disrupts them, causing the cancer cells to die. RBD has also been shown by Provectus and independent researchers to trigger each major, distinct form of lysosomal cell death; that is, apoptosis, autophagy, and necrosis.

 

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RBD’s lysosomal targeting comprises:

 

  Transiting the plasmalemma (i.e., the cell membrane) of cancer cells. RBD penetrates the cell membrane of cancerous cells which normally protects the cancer cell from its surrounding environment. RBD, however, is excluded from normal cells;
     
  Accumulating in the lysosomes of cancer cells. As noted above, the physicochemical properties of lysosomes trap RBD;
     
  Triggering the release of lysosomal contents. Acute autolysis can occur within 60 minutes. Early preclinical work by Provectus on RBD’s lysosomal targeting showed identical responses in different disease models, such as Hepa1-6 murine hepatocellular carcinoma, HTB-133 human breast carcinoma, and H96Ar human multi-drug resistant small cell lung carcinoma;
     
  Inducing the rapid cell death of cancer cells. Early trypan blue exclusion work by Provectus confirmed cell death within hours; and,
     
  Intracellular pH consistency with the release of acidic lysosomal contents. Early seminaphthorhodafluor-1 (“SNARF-1”) staining work by Provectus confirmed lower intracellular pH upon exposure to RBD.

 

Hematology. In primary cells and cell lines derived from pediatric leukemia patients, RBD may lead to stimulator of interferon genes (“STING”) dimerization and the release of interferon gamma, indicating a potential immune activation mechanism of RBD. Heat shock proteins, which chaperone misfolded or abnormally-folded proteins, associated with STING dimerization in RBD-treated cells, indicating a mechanism that may lead to enhanced STING activation following RBD-specific treatment.

 

Virology. The Company’s work in this disease area to identify activity and elucidate mechanism(s) of action is ongoing.

 

Dermatology. For psoriasis, pathways significantly improved by PH-10 drug product treatment include published psoriasis transcriptomes and cellular responses mediated by IL-17, IL-22, and interferons. Clinical work has shown that more than 500 disease-related genes were down-regulated after four weeks of application and a wide-range of central psoriasis-related genes, including IL-23, IL-17, IL-22, S100A7, IL-19, IL-36, and CXCL1, were normalized (i.e., treated lesional skin had values in the same range as baseline non-lesional skin).

 

Our Drug Development Strategy

 

Oncology. The Company’s strategy is to (i) demonstrate the independent action of single-agent IL PV-10; that is, safety and activity in T cell and non-T cell inflamed tumor types, in high and low tumor mutation burden tumor types, and in other tumor type categories, such as gene mutations, (ii) demonstrate the coordinated induction of multiple immune signaling pathways (i.e., functional ICD); Snyder et al., Sci Immunol 2019) by IL PV-10 treatment, (iii) demonstrate the functional T cell response generated by IL PV-10 treatment, and (iv) contrast and compare IL PV-10 treatment (i.e., safety, activity, and induced immune response) with that of immune checkpoint blockade (“CB”) and other drug classes in single-agent and IL PV-10-based combination therapy settings.

 

This strategy may quicken the advancement of single-agent IL PV-10 along a pathway-to-approval in solid tumor cancer indications where there is high unmet need, limited activity from other therapies, and the opportunity to display the immune response from IL PV-10 treatment, such as mNET (NCT02693067). This strategy may also permit the Company to develop and advance a cancer combination therapy involving one or more CB and/or other drug classes along a pathway-to-approval in a disease indication where there is high unmet need, limited activity from standard of care (“SOC”) treatment, and the opportunity to display how IL PV-10 augments clinical response to existing or emerging SOCs, such as mUM (i.e., combination therapy with an anti-CTLA-4 agent and an anti-PD-1 agent) (NCT00986661).

 

Hematology. The Company and research collaborators are undertaking preclinical work on a potential, systemically-administered, cGMP RBD leukemia treatment and/or cancer vaccine for pediatric patients.

 

Virology. The Company and research collaborators are undertaking preclinical work on a potential, systemically-administered, cGMP RBD therapy for SARS-CoV-2.

 

Dermatology. The Company’s strategy is to (i) demonstrate 12-week single-agent administration proof-of-concept (“POC”) for top. PH-10 that includes (a) a preclinical safety study of extended 12-week administration (compared to, previously, four weeks), (b) a clinical mechanism of action study in atopic dermatitis, which would be a “book-end” trial to the already completed clinical mechanism study in psoriasis, (c) Phase 2 randomized controlled trials of top. PH-10 for the treatment of psoriasis and atopic dermatitis that may potentially utilize SOC comparators, and (d) end-of-Phase 2 meetings with the FDA upon the completion of the abovementioned Phase 2 trials, and (ii) expand POC top. PH-10 treatment to include dermatology combination therapy. Our goal for this POC work is to achieve Phase 3 trial-ready status for top. PH-10 in both psoriasis and atopic dermatitis.

 

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Components of Operating Results

 

Research and Development Expenses

 

A large component of our total operating expenses is the Company’s investment in research and development activities, including the clinical development of our product candidates. Research and development expenses represent costs incurred to conduct research and undertake clinical trials to develop our drug product candidates. These expenses consist primarily of:

 

  Costs of conducting clinical trials, including amounts paid to clinical centers, clinical research organizations and consultants, among others;
  Salaries and related expenses for personnel, including stock-based compensation expense;
  Other outside service costs including cost of contract manufacturing;
  The costs of supplies and reagents; and,
  Occupancy and depreciation charges.

 

We expense research and development costs as incurred.

 

Research and development activities are central to our business model. We expect our research and development expenses to increase in the future as we advance our existing product candidates through clinical trials and pursue their regulatory approval. Undertaking clinical development and pursuing regulatory approval are both costly and time-consuming activities. As a result of known and unknown uncertainties, we are unable to determine the duration and completion costs of our research and development activities, or if, when, and to what extent we will generate revenue from any subsequent commercialization and sale of our drug product candidates.

 

General and Administrative Expenses

 

General and administrative expense consists primarily of salaries, stock-based compensation expense and other related costs for personnel in executive, finance, accounting, business development, legal, information technology and corporate communication functions. Other costs include facility costs not otherwise included in research and development expense, insurance, and professional fees for legal, patent and accounting services.

 

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Results of Operations

 

Comparison of the Three Months Ended June 30, 2020 and June 30, 2019

 

Overview

 

Total operating expenses were $1,210,848 for the three months ended June 30, 2020, a decrease of $628,539 or 34.2% compared to the three months ended June 30, 2019. The decrease was driven primarily by our continued transformation and process improvement efforts within the Company and closure of our phase III trial, as well as slower enrollments and treatments in our clinical trials due to the SARS-CoV-2 pandemic. Net loss for the three months ended June 30, 2020 was $1,614,805, a decrease of $562,514 or 25.8% which was primarily attributable to lower expenses incurred as a result of the SARS-CoV-2 pandemic.

 

   For the Three Months Ended           
   June 30,           
   2020   2019   Increase/(Decrease)   % Change 
                 
Operating Expenses:                    
Research and development  $696,454   $1,208,324   $(511,870)   -42.4%
General and administrative   514,394    631,063    (116,669)   -18.5%
Total Operating Expenses   1,210,848    1,839,387    (628,539)   -34.2%
                     
Total Operating Loss   (1,210,848)   (1,839,387)   628,539    -34.2%
Other Income/(Expense):                    
EIDL grant   3,000    -    3,000    0.0%
Gain on settlement of lawsuits   -    -    -    0.0%
Research and development tax credit   113    (1,131)   1,244    0.0%
Investment and interest income   3,334    19,650    (16,316)   -83.0%
Interest expense   (410,404)   (356,451)   (53,953)   15.1%
Total Other Income/(Expense)   (403,957)   (337,932)   (66,025)   19.5%
                     
Net Loss  $(1,614,805)  $(2,177,319)  $562,514    -25.8%

 

Research and Development Expenses

 

Research and development expenses were $696,454 for the three months ended June 30, 2020, a decrease of $511,870 or 42.4% compared to the three months ended June 30, 2019. The decrease was primarily due to (i) reduced cost on clinical trials and research expenses due to slow enrollments and treatments in clinical trials due to the SARS-CoV-2 pandemic, and (ii) a decrease in amortization of patents due to patents being fully amortized.

 

The following table summarizes our research and development expenses incurred during the three months ended June 30, 2020 and June 30, 2019:

 

   For the Three Months Ended         
   June 30,         
   2020   2019   Increase/(Decrease)   % Change 
                 
Operating Expenses:                    
Research and development:                    
Clinical trial and research expenses  $477,384   $910,591   $(433,207)   -47.6%
Depreciation/amortization   62,489    169,942    (107,453)   -63.2%
Insurance   72,685    61,049    11,636    19.1%
Payroll and taxes   68,282    50,932    17,350    34.1%
Rent and utilities   15,614    15,811    (197)   -1.2%
Total research and development  $696,454   $1,208,324   $(511,870)   -42.4%

 

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General and Administrative Expenses

 

General and administrative expenses were $514,394 for the three months ended June 30, 2020, a decrease of $116,669 or 18.5% compared to the three months ended June 30, 2019. The decrease was primarily due to (i) lower legal fees as we concluded the Company’s lawsuits against former accounting vendors, (ii) a decrease in payroll and related taxes, and (iii) lower professional fees as a result of lower negotiated rates.

 

The following table summarizes our general and administrative expenses incurred during the three months ended June 30, 2020 and June 30, 2019:

 

   For the Three Months Ended         
   June 30,         
   2020   2019   Increase/(Decrease)   % Change 
                 
Operating Expenses:                    
General and administrative:                    
Depreciation  $1,362   $1,362   $-    0.0%
Directors fees   96,250    96,250    -    0.0%
Insurance   53,610    43,446    10,164    23.4%
Legal and litigation   129,563    153,716    (24,153)   -15.7%
Other general and administrative cost   18,766    45,207    (26,441)   -58.5%
Payroll and taxes   48,436    75,168    (26,732)   -35.6%
Professional fees   158,318    207,265    (48,947)   -23.6%
Rent and utilities   8,078    8,648    (570)   -6.6%
Foreign currency translation   11    -    11    0.0%
Total general and administrative  $514,394   $631,063   $(116,669)   -18.5%

 

Other Income/(Expense)

 

Other income decreased by $66,025 from $337,932 for the three months ended June 30, 2019 to $403,957 for the three months ended June 30, 2020.

 

Interest expense increased by $53,953 from $356,451 for the three months ended June 30, 2019 to $410,404 for the three months ended June 30, 2020. The increase was due to the increased number of convertible notes payable outstanding relating to the PRH Notes from the 2017 and 2020 Financings.

 

Comparison of the Six Months Ended June 30, 2020 and June 30, 2019

 

Overview

 

Total operating expenses were $2,659,088 for the six months ended June 30, 2020, a decrease of $976,883 or 26.9% compared to the six months ended June 30, 2019. The decrease was driven primarily by our continued transformation and process improvement efforts within the Company, as well as, slower enrollments and treatments in our clinical trials due to the SARS-CoV-2 pandemic. Net loss for the six months ended June 30, 2020 was $3,441,866, a decrease of $102,283 or 2.9% which was primarily attributable to gains recognized in connection with settlements of lawsuits in 2019.

 

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   For the Six Months Ended         
   June 30,         
   2020   2019   Increase/(Decrease)   % Change 
             
Operating Expenses:                    
Research and development  $1,605,900   $2,245,655   $(639,755)   -28.5%
General and administrative   1,053,188    1,390,316    (337,128)   -24.2%
Total Operating Expenses   2,659,088    3,635,971    (976,883)   -26.9%
                     
Total Operating Loss   (2,659,088)   (3,635,971)   (976,883)   26.9%
Other Income/(Expense):                    
EIDL grant   3,000    -    3,000    0.0%
Gain on settlement of lawsuits   -    675,000    (675,000)   -100.0%
Research and development tax credit   26,364    82,941    (56,577)   -68.2%
Investment and interest income   3,413    21,905    (18,492)   -84.4%
Interest expense   (815,555)   (691,024)   (124,531)   18.0%
Total Other Income/(Expense)   (782,778)   88,822    (874,600)   -984.7%
                     
Net Loss  $(3,441,866)  $(3,547,149)  $(102,283)   2.9%

 

Research and Development Expenses

 

Research and development expenses were $1,605,900 for the six months ended June 30, 2020, a decrease of $639,755 or 28.5% compared to the six months ended June 30, 2019. The decrease was primarily due to (i) reduced cost on clinical trials and research expenses with closure of the phase III trial and slower enrollments and treatments in clinical trials due to the SARS-CoV-2 pandemic, (ii) a decrease in payroll and related taxes due to a lower negotiated employment agreement, and (iii) a decrease in amortization of patents due to patents being fully amortized.

 

The following table summarizes our research and development expenses incurred during the six months ended June 30, 2020 and June 30, 2019:

 

   For the Six Months Ended         
   June 30,         
   2020   2019   Increase/(Decrease)   % Change 
                 
Operating Expenses:                    
Research and development:                    
Clinical trial and research expenses  $1,061,441   $1,538,126   $(476,685)   -31.0%
Depreciation/amortization   232,431    339,884    (107,453)   -31.6%
Insurance   146,277    127,012    19,265    15.2%
Payroll and taxes   134,761    200,407    (65,646)   -32.8%
Rent and utilities   30,990    40,226    (9,236)   -23.0%
Total research and development  $1,605,900   $2,245,655   $(639,755)   -28.5%

 

20

 

 

General and Administrative Expenses

 

General and administrative expenses were $1,053,188 for the six months ended June 30, 2020, a decrease of $337,128 or 24.2% compared to the six months ended June 30, 2019. The decrease was primarily due to (i) lower legal fees as we concluded the Company’s lawsuits against former accounting vendors, (ii) a decrease in payroll and related taxes, and (iii) lower professional fees as a result of lower negotiated rates.

 

The following table summarizes our general and administrative expenses incurred during the six months ended June 30, 2020 and June 30, 2019:

 

   For the Six Months Ended         
   June 30,         
   2020   2019   Increase/(Decrease)   % Change 
                 
Operating Expenses:                    
General and administrative:                    
Depreciation  $2,723   $2,723   $-    0.0%
Directors fees   192,500    192,500    -    0.0%
Insurance   95,476    91,842    3,634    4.0%
Legal and litigation   217,625    347,357    (129,732)   -37.3%
Other general and administrative cost   35,773    69,679    (33,906)   -48.7%
Payroll and taxes   83,922    198,439    (114,517)   -57.7%
Professional fees   408,329    467,477    (59,148)   -12.7%
Rent and utilities   15,738    21,087    (5,349)   -25.4%
Foreign currency translation   1,102    (788)   1,890    -239.8%
Total general and administrative  $1,053,188   $1,390,316   $(337,128)   -24.2%

 

Other Income/(Expense)

 

Other income decreased by $874,600 from $88,822 for the six months ended June 30, 2019 to a loss of $782,778 for the six months ended June 30, 2020 which was primarily attributable to gains recognized in connection with settlements of lawsuits in 2019.

 

Interest expense increased by $124,531 from $691,024 for the six months ended June 30, 2019 to $815,555 for the six months ended June 30, 2020. The increase was due to the increased number of convertible notes payable outstanding relating to the PRH Notes from the 2017 and 2020 Financings.

 

Liquidity and Capital Resources

 

Our cash and cash equivalents were $1,483,214 at June 30, 2020, compared to $590,706 at December 31, 2019. The condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have continuing net losses and negative cash flows from operating activities. In addition, we have an accumulated deficit of $237,258,694 as of June 30, 2020. These conditions raise substantial doubt about our ability to continue as a going concern for a period within one year from the date that the financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern depends on our ability to obtain additional financing as may be required to fund current operations.

 

During the six months ended June 30, 2020, we received a loan of $62,500 under the Paycheck Protection Program (“PPP”) and received a grant of $3,000 from the Economic Injury Disaster Loan (“EIDL”) under the CARES Act. The grant was recognized as other income during the three and six months ended June 30, 2020.

 

Management’s plans include selling our equity securities and obtaining other financing to fund our capital requirement and on-going operations, including the 2020 Financing; however, there can be no assurance we will be successful in these efforts. The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern. Significant funds will be needed to continue and complete our ongoing and planned clinical trials.

 

The SARS-CoV-2 pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact our ability to raise additional funds and may also impact the volatility of our stock price and trading in our stock. Moreover, the pandemic has also significantly impacted economies worldwide, which could result in adverse effects on our business and operations. We cannot be certain what the overall impact of the SARS-CoV-2 pandemic will be on our business. It has the potential to adversely affect our business, financial condition, results of operations, and prospects. We have taken several temporary precautionary measures intended to help ensure the well-being of our employees and contractors and to minimize disruption to our business. We considered the impact of SARS-CoV-2 pandemic on our business and operational assumptions and estimates, and determined there were no material adverse impacts on our results of operations and financial position at June 30, 2020.

 

21

 

 

Access to Capital

 

Management plans to access capital resources through possible public or private equity offerings, including the 2020 Financing, exchange offers, debt financings, corporate collaborations or other means. If we are unable to raise sufficient capital through the 2020 Financing or otherwise, we will not be able to pay our obligations as they become due.

 

The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, we cannot assure you that management will be successful in implementing the Company’s business plan of developing, licensing, and/or commercializing our prescription drug product candidates. Moreover, even if we are successful in improving our current cash flow position, we nonetheless plan to seek additional funds to meet our current and long-term requirements in 2020 and beyond. We anticipate that these funds will otherwise come from the proceeds of private placement transactions, including the 2020 Financing, the exercise of existing warrants and outstanding stock options, or public offerings of debt or equity securities. While we believe that we have a reasonable basis for our expectation that we will be able to raise additional funds, we cannot assure you that we will be able to complete additional financing in a timely manner. In addition, any such financing may result in significant dilution to stockholders.

 

Critical Accounting Policies

 

For a description of our critical accounting policies, see Note 3 – Critical Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

 

Recently Issued Accounting Standards

 

Recently issued accounting standards are included in Note 3 – Critical Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as special purpose entities (“SPEs”).

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our principal executive officer and principal financial officer, carried out an evaluation 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, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

22

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

The information required by this item is incorporated by reference from Part I, Item 1. Financial Statements, Notes to Condensed Consolidated Financial Statements, Note 9.

 

ITEM 1A. RISK FACTORS.

 

There have been no material changes to the risk factors that were disclosed in the 2019 Form 10-K, other than set forth below.

 

Our business, financial condition and results of operations may be adversely affected by the severe acute respiratory syndrome (“SARS”)-associated CoV-2 (“SARS-CoV-2”) pandemic or other similar outbreaks of contagious diseases.

 

Outbreaks of contagious diseases and other adverse public health developments, affecting us and/or the third parties on which we rely, could have a material and adverse effect on our business, financial condition and results of operations. SARS-CoV-2 pandemic, which was reported to have begun in late-2019 and has spread worldwide, has resulted in slower enrollment and treatments in our clinical trials and may affect our ability to initiate and/or complete current and/or or future preclinical studies and/or clinical trials; disrupt our regulatory activities; and/or have other adverse effects on our clinical development. In addition, stay-at-home orders, business closures, travel restrictions, supply chain disruptions and employee or independent contractor illness or quarantines could result in disruptions to our operations, which could adversely impact our results from operations and financial condition. The SARS-CoV-2 pandemic has also caused substantial disruption in capital and financial markets and adversely impacted economies worldwide, any and/or all of which may disrupt our business, negatively impact our ability to raise additional funds, and adversely affect our results of operations and financial condition. Moreover, many risk factors set forth in the 2019 Form 10-K should be interpreted as heightened risks as a result of the impact of the SARS-CoV-2 pandemic. The extent to which the SARS-CoV-2 pandemic may impact our business, financial condition and results of operations will depend on the manner in which this pandemic continues to evolve and future developments in response thereto, which are highly uncertain and cannot be predicted with confidence as of the date of this Form 10-Q.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

2020 Financing

 

During the three months ended June 30, 2020, the Company did not enter into any additional 2020 Notes with related party investors. As of June 30, 2020, the Company had drawn down the entire $100,000 under 2020 Notes with related party investors.

 

During the three months ended June 30, 2020, the Company entered into additional 2020 Notes with non-related party accredited investors in the aggregate principal amount of $2,175,000. As of June 30, 2020, the Company had drawn down the entire $2,475,000 under 2020 Notes with non-related party accredited investors.

 

Subsequent to June 30, 2020, the Company entered into a 2020 Note with a non-related party in the aggregate principal amount of $450,000 in connection with a 2nd Loan received by the Company for the same amount.

 

The Company believes that such transactions were exempt from the registration requirements of the Securities Act of 1933, as amended, (the “Securities Act”), in reliance on Section 4(a)(2) of the Securities Act (or Rule 506 of Regulation D promulgated thereunder) as transactions by an issuer not involving a public offering.

 

For further details on the terms of the 2017 and 2020 Notes, refer to our Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC on March 5, 2020.

 

Incentive Compensation to Consultants

 

During the three months ended June 30, 2020, the Company issued 25,000 shares of common stock to a consultant in connection with the contract entered into on April 1, 2019. The Company believes that such transactions were exempt from the registration requirements of the Securities Act in reliance on Section 4(a)(2) of the Securities Act (or Rule 506 of Regulation D promulgated thereunder) as a transaction by an issuer not involving a public offering.

 

23

 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. Mine Safety Disclosures.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS.

 

Exhibit No.   Description
     
31.1**   Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) (Section 302 Certification).
     
31.2**   Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) (Section 302 Certification).
     
32***   Certification of Principal Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (Section 906 Certification).
     
101**   Interactive Data Files.

 

** Filed herewith.

*** Furnished herewith.

 

24

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  PROVECTUS BIOPHARMACEUTICALS, INC.
     
August 12, 2020 By: /s/ Bruce Horowitz
    Bruce Horowitz
    Chief Operating Officer (Principal Executive Officer)
     
  By: /s/ Heather Raines
    Heather Raines, CPA
    Chief Financial Officer (Principal Financial Officer)

 

25

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION

 

I, Bruce Horowitz, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Provectus Biopharmaceuticals, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 12, 2020 By: /s/ Bruce Horowitz
    Bruce Horowitz
    Chief Operating Officer (Principal Executive Officer)

 

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATION

 

I, Heather Raines, CPA, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Provectus Biopharmaceuticals, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 12, 2020 By: /s/ Heather Raines
    Heather Raines, CPA
    Chief Financial Officer (Principal Financial Officer)

 

 

 

 

EX-32 4 ex32.htm

 

Exhibit 32

 

CERTIFICATION PURSUANT TO RULE 13a-14(b) UNDER

THE SECURITIES EXCHANGE ACT OF 1934 AND

SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

 

Each of the undersigned, Bruce Horowitz, the Chief Operating Officer (principal executive officer) of Provectus Biopharmaceuticals, Inc. (the “Company”), and Heather Raines, CPA, the Chief Financial Officer (principal financial officer) of the Company, certifies, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, that (1) this Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act, and (2) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

This Certification is signed on August 12, 2020.

 

  By: /s/ Bruce Horowitz
    Bruce Horowitz
    Chief Operating Officer (Principal Executive Officer)

 

  By: /s/ Heather Raines
    Heather Raines, CPA
    Chief Financial Officer (Principal Financial Officer)

 

 

 

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Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2020
Dec. 31, 2019
Current Assets:    
Cash and cash equivalents $ 1,483,214 $ 590,706
Short-term receivables - legal fees, settlement and other, net 3,777 55,058
Prepaid expenses 142,659 350,249
Total Current Assets 1,629,650 996,013
Equipment and furnishings, less accumulated depreciation of $71,676 and $64,630, respectively 51,338 58,384
Operating lease right-of-use asset 157,599 194,400
Patents, net of accumulated amortization of $11,715,455 and $11,487,338, respectively 228,107
Total Assets 1,838,587 1,476,904
Current Liabilities:    
Accounts payable - trade 1,457,729 1,125,890
Other accrued expenses 1,376,008 1,255,266
Current portion of accrued interest 2,114,852 65,333
Current portion of accrued interest - related parties 1,494,357
Current portion of note payable 23,438
Current portion of convertible notes payable 15,872,000 500,000
Current portion of convertible notes payable - related parties 6,770,000
Current portion of operating lease liability 81,149 76,423
Total Current Liabilities 29,189,533 3,022,912
Accrued interest, non-current portion 1,501,864
Accrued interest, non-current portion - related parties 1,226,582
Note payable, non-current portion 39,062
Convertible notes payable, non-current portion 12,997,000
Convertible notes payable, non-current portion - related parties 6,670,000
Operating lease liability, non-current portion 86,974 130,658
Total Liabilities 29,315,569 25,549,016
Commitments and contingencies (Note 9)
Stockholders' Deficiency:    
Preferred stock; par value $0.001 per share; 25,000,000 shares authorized; Series B Convertible Preferred Stock; 240,000 shares designated; 100 shares issued and outstanding at June 30, 2020 and December 31, 2019; aggregate liquidation preference of $3,500 at June 30, 2020 and December 31, 2019
Common stock; par value $0.001 per share; 1,000,000,000 shares authorized; 390,714,475 and 389,889,475 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively 390,714 389,889
Additional paid-in capital 209,421,800 209,378,835
Accumulated other comprehensive loss (30,802) (24,008)
Accumulated deficit (237,258,694) (233,816,828)
Total Stockholders' Deficiency (27,476,982) (24,072,112)
Total Liabilities and Stockholders' Deficiency $ 1,838,587 $ 1,476,904
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.20.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Jun. 30, 2020
Dec. 31, 2019
Accumulated depreciation on equipment and furnishings $ 71,676 $ 64,630
Accumulated amortization on patents $ 11,715,455 $ 11,487,338
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 25,000,000 25,000,000
Aggregate liquidation preference $ 3,500 $ 3,500
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 390,714,475 389,889,475
Common stock, shares outstanding 390,714,475 389,889,475
Series B Convertible Preferred Stock [Member]    
Preferred stock, shares authorized 240,000 240,000
Preferred stock, shares issued 100 100
Preferred stock, shares outstanding 100 100
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.20.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Operating Expenses:        
Research and development $ 696,454 $ 1,208,324 $ 1,605,900 $ 2,245,655
General and administrative 514,394 631,063 1,053,188 1,390,316
Total Operating Expenses 1,210,848 1,839,387 2,659,088 3,635,971
Total Operating Loss (1,210,848) (1,839,387) (2,659,088) (3,635,971)
Other Income/(Expense):        
EIDL grant 3,000 3,000
Gain on settlement of lawsuits 675,000
Research and development tax credit 113 (1,131) 26,364 82,941
Investment and interest income 3,334 19,650 3,413 21,905
Interest expense (410,404) (356,451) (815,555) (691,024)
Total Other Income/(Expense) (403,957) (337,932) (782,778) 88,822
Net Loss $ (1,614,805) $ (2,177,319) $ (3,441,866) $ (3,547,149)
Basic and Diluted Loss Per Common Share $ (0.00) $ (0.01) $ (0.01) $ (0.01)
Weighted Average Number of Common Shares Outstanding - Basic and Diluted 390,714,200 384,773,639 390,635,608 384,769,219
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.20.2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
Net Loss $ (1,614,805) $ (2,177,319) $ (3,441,866) $ (3,547,149)
Other Comprehensive Income (Loss):        
Foreign currency translation adjustments 2,233 (2,496) (30,802) (24,859)
Total Comprehensive Loss $ (1,612,572) $ (2,179,815) $ (3,472,668) $ (3,572,008)
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.20.2
Condensed Consolidated Statements of Changes in Stockholders' Deficiency (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2020
Jun. 30, 2019
Preferred Stock Series B [Member]            
Beginning Balance
Beginning Balance, shares 100 100 100 100 100 100
Common stock issued upon exercise of warrants        
Common stock issued upon exercise of warrants, shares        
Common stock issued for services        
Common stock issued for services, shares        
Warrants issued for services        
Net loss    
Other comprehensive loss    
Ending Balance
Ending Balance, shares 100 100 100 100 100 100
Common Stock [Member]            
Beginning Balance $ 390,689 $ 389,889 $ 384,715 $ 384,615 $ 389,889 $ 384,615
Beginning Balance, shares 390,689,475 389,889,475 384,714,528 384,614,528 389,889,475 384,614,528
Common stock issued upon exercise of warrants   $ 800   $ 100    
Common stock issued upon exercise of warrants, shares   800,000   100,000    
Common stock issued for services $ 25   $ 191      
Common stock issued for services, shares 25,000   191,590      
Warrants issued for services        
Net loss    
Other comprehensive loss    
Ending Balance $ 390,714 $ 390,689 $ 384,906 $ 384,715 $ 390,714 $ 384,906
Ending Balance, shares 390,714,475 390,689,475 384,906,118 384,714,528 390,714,475 384,906,118
Additional Paid-In Capital [Member]            
Beginning Balance $ 209,420,675 $ 209,378,835 $ 209,097,417 $ 209,092,187 $ 209,378,835 $ 209,092,187
Common stock issued upon exercise of warrants   41,840   5,230    
Common stock issued for services 1,125   8,771      
Warrants issued for services   10,113      
Net loss    
Other comprehensive loss    
Ending Balance 209,421,800 209,420,675 209,116,301 209,097,417 209,421,800 209,116,301
Accumulated Other Comprehensive Loss [Member]            
Beginning Balance (33,035) (24,008) (22,363) (24,008)
Common stock issued upon exercise of warrants        
Common stock issued for services        
Warrants issued for services        
Net loss    
Other comprehensive loss 2,233 (9,027) (2,496) (22,363)    
Ending Balance (30,802) (33,035) (24,859) (22,363) (30,802) (24,859)
Accumulated Deficit [Member]            
Beginning Balance (235,643,889) (233,816,828) (228,264,121) (226,894,291) (233,816,828) (226,894,291)
Common stock issued upon exercise of warrants        
Common stock issued for services        
Warrants issued for services        
Net loss (1,614,805) (1,827,061) (2,177,319) (1,369,830)    
Other comprehensive loss    
Ending Balance (237,258,694) (235,643,889) (230,441,440) (228,264,121) (237,258,694) (230,441,440)
Beginning Balance (25,865,560) (24,072,112) (18,804,352) (17,417,489) (24,072,112) (17,417,489)
Common stock issued upon exercise of warrants   42,640   5,330    
Common stock issued for services 1,150   8,962      
Warrants issued for services   10,113      
Net loss (1,614,805) (1,827,061) (2,177,319) (1,369,830) (3,441,866) (3,547,149)
Other comprehensive loss 2,233 (9,027) (2,496) (22,363) (30,802) (24,859)
Ending Balance $ (27,476,982) $ (25,865,560) $ (20,965,092) $ (18,804,352) $ (27,476,982) $ (20,965,092)
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.20.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Cash Flows From Operating Activities:    
Net loss $ (3,441,866) $ (3,547,149)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation 1,150 19,075
Noncash lease expense 36,801
Depreciation 7,046 42,622
Amortization of patents 228,107 335,560
Changes in operating assets and liabilities    
Short term receivables 47,653 49,863
Prepaid expenses 207,590 127,794
Accounts payable - trade 332,134 (1,757,954)
Other accrued expenses 120,817 481,936
Operating lease liability (38,958)
Accrued interest expense 815,430 691,024
Net Cash Used In Operating Activities (1,684,096) (3,557,229)
Cash Flows From Financing Activities:    
Proceeds from issuance of convertible notes payable 2,375,000 4,825,000
Proceeds from issuance of convertible notes payable - related parties 100,000 25,000
Proceeds from note payable 62,500
Proceeds from exercise of warrants 42,640 5,330
Net Cash Provided By Financing Activities 2,580,140 4,855,330
Effect of Exchange Rate Changes on Cash (3,536) (24,859)
Net Increase In Cash and Cash Equivalents 892,508 1,273,242
Cash and Cash Equivalents, Beginning of Period 590,706 50,986
Cash and Cash Equivalents, End of Period 1,483,214 1,324,228
Cash paid during the period for:    
Interest
Income taxes
Non-cash investing and financing activities:    
Offset of related party receivable and payable $ 252,750
XML 18 R8.htm IDEA: XBRL DOCUMENT v3.20.2
Business Organization, Nature of Operations and Basis of Presentation
6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Organization, Nature of Operations and Basis of Presentation

1. Business Organization, Nature of Operations and Basis of Presentation

 

Provectus Biopharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, “Provectus” or the “Company”), is a clinical-stage biotechnology company that is developing immunotherapy medicines based on an entire, wholly-owned family of small molecules called halogenated xanthenes. The Company’s proprietary lead molecule is current Good Manufacturing Practice (“cGMP”) rose bengal disodium (“RBD”).

 

  Oncology: PV-10, an investigational autolytic cancer immunotherapy administered by intralesional (“IL”) injection and formulation of cGMP RBD, is undergoing clinical study for adult solid tumor cancers, like melanoma and gastrointestinal (“GI”) tumors (including hepatocellular carcinoma (“HCC”), colorectal cancer metastatic to the liver (“mCRC”), neuroendocrine tumors (“NET”) metastatic to the liver (“mNET”), and uveal melanoma metastatic to the liver (“mUM”), among others). Orphan drug designation status has been granted to IL PV-10 by the U.S. Food and Drug Administration (the “FDA”) for metastatic melanoma in 2006, HCC in 2011, and ocular melanoma (including uveal melanoma) in 2019.
     
  Pediatric Oncology: IL PV-10 is also undergoing preclinical study for pediatric solid tumor cancers (including neuroblastoma, Ewing sarcoma, rhabdomyosarcoma, and osteosarcoma). Orphan drug designation status has been granted to IL PV-10 by the FDA for neuroblastoma in 2018.
     
  Hematology: A new systemically-administered formulation of cGMP RBD is undergoing preclinical study for pediatric blood cancers (including leukemia).
     
  Virology: A new systemically-administered formulation of cGMP RBD is undergoing preclinical study for the novel strain of coronavirus (“CoV”), severe acute respiratory syndrome (“SARS”) CoV 2 (“SARS-CoV-2”).
     
  Dermatology: PH-10, an investigational immuno-dermatology agent administered as a topical (“top.”) gel and formulation of cGMP RBD, is undergoing clinical study for inflammatory dermatoses (including psoriasis and atopic dermatitis).

 

To date, the Company has not generated any revenues or profits from planned principal operations. The Company’s activities are subject to significant risks and uncertainties, including failing to successfully develop and license or commercialize the Company’s prescription drug candidates.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information pursuant to Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be reviewed in conjunction with the Company’s audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2019 filed with the SEC on March 5, 2020. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

 

SARS-CoV-2 was reportedly first identified in late-2019 and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the SARS-CoV-2 pandemic, many companies have experienced disruptions of their operations and the markets they serve. The Company has taken several temporary precautionary measures intended to help ensure the well-being of its employees and contractors and to minimize business disruption. The Company considered the impact of SARS-CoV-2 pandemic on its business and operational assumptions and estimates, and determined there were no material adverse impacts on the Company’s results of operations and financial position at June 30, 2020.

 

The full extent of the SARS-CoV-2 pandemic impacts on the Company’s operations and financial condition is uncertain. A prolonged SARS-CoV-2 pandemic could have a material adverse impact on the Company’s business and financial results, including the timing and ability of the Company to initiate and/or complete current and/or future preclinical studies and/or clinical trials; disrupt the Company’s regulatory activities; and/or have other adverse effects on the Company’s clinical development.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.20.2
Liquidity and Going Concern
6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Liquidity and Going Concern

2. Liquidity and Going Concern

 

The Company’s cash and cash equivalents were $1,483,214 at June 30, 2020. The Company continues to incur significant operating losses. Management expects that significant on-going operating expenditures will be necessary to successfully implement the Company’s business plan and develop and market its products. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued. Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to develop IL PV-10, top. PH-10, and/or any other halogenated xanthene-based drug products, and to raise additional capital.

 

During the six months ended June 30, 2020, the Company received a loan of $62,500 under the Paycheck Protection Program (“PPP”) (see Note 4) and received a grant of $3,000 from the Economic Injury Disaster Loan (“EIDL”) under the CARES Act. The grant was recognized as other income during the three and six months ended June 30, 2020.

 

Subsequent to June 30, 2020, the Company received an aggregate $194,438 in connection with a warrant exercise. The Company also received an aggregate $450,000 in connection with the 2020 Financing. See Note 10 – Subsequent Events.

 

The Company plans to access capital resources through possible public or private equity offerings, including the 2020 Financing (as defined in Note 4), exchange offers, debt financings, corporate collaborations or other means. In addition, the Company continues to explore opportunities to strategically monetize its lead drug candidates, IL PV-10 and top. PH-10, through potential co-development and licensing transactions, although there can be no assurance that the Company will be successful with such plans. The Company has historically been able to raise capital through equity offerings, although no assurance can be provided that it will continue to be successful in the future. If the Company is unable to raise sufficient capital through the 2020 Financing or otherwise, it will not be able to pay its obligations as they become due.

 

The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, the Company cannot assure you that it will be successful in developing further, co-developing, licensing, and/or commercializing IL PV-10, top. PH-10, and/or any other halogenated xanthene-based drug products of the Company, or entering into any commercial financial transaction. Moreover, even if the Company is successful in improving its current cash flow position, the Company nonetheless plans to seek additional funds to meet its long-term requirements in 2020 and beyond. The Company anticipates that these funds will otherwise come from the proceeds of private placement transactions, including the 2020 Financing, the exercise of existing warrants and outstanding stock options, or public offerings of debt or equity securities. While the Company believes that it has a reasonable basis for its expectation that it will be able to raise additional funds, the Company cannot assure you that it will be able to complete additional financing in a timely manner. In addition, any such financing may result in significant dilution to stockholders.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Critical Accounting Policies
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Critical Accounting Policies

3. Critical Accounting Policies

 

Since the date the Company’s December 31, 2019 consolidated financial statements were issued in its 2019 Annual Report, there have been no material changes to the Company’s significant accounting policies, except as disclosed below.

 

Recently Issued Accounting Standards

 

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-03, Codification Improvements to Financial Instruments. There are seven issues addressed in this update. Issues 1 – 5 were clarifications and codifications of previous updates. Issue 3 relates only to depository and lending institutions and therefore would not be applicable to the Company. Issue 6 was a clarification on determining the contractual term of a net investment in a lease for purposes of measuring expected credit losses, an issue not applicable to the Company. Issue 7 relates to the regaining control of financial assets sold and the recordation of an allowance for credit losses. The amendment related to issues 1, 2, 4 and 5 became effective immediately upon adoption of the update. Issue 3 becomes effective for fiscal years beginning after December 15, 2019. Issues 6 and 7 become effective on varying dates that relate to the dates of adoption of other updates. Management’s initial analysis is that it does not believe the new guidance will substantially impact the Company’s financial statements. The Company adopted certain provisions which have become effective during fiscal 2020 within ASU 2020-03 and its adoption did not have a material impact on the Company’s condensed consolidated financial statements and financial statement disclosures. The Company is currently evaluating the effect that adopting the remaining new accounting guidance will have on its condensed consolidated financial statements and related disclosures.

 

The CARES Act

 

On March 27, 2020, President Trump signed the CARES Act into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. Under ASC 740 of GAAP, the effects of new legislation are recognized upon enactment. Accordingly, the CARES Act is effective beginning in the quarter ended March 31, 2020. The adoption of the CARES Act provisions did not have a material impact on the Company’s condensed consolidated financial statements.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.20.2
Convertible Notes Payable
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Convertible Notes Payable

4. Convertible Notes Payable

 

2020 Financing

 

On December 31, 2019, the Board approved a Definitive Financing Term Sheet (the “2020 Term Sheet”), which sets forth the terms under which the Company will use its best efforts to arrange for financing of a maximum of $20,000,000 (the “2020 Financing”). The 2020 Financing will be in the form of secured convertible loans (“Loans”) from investors that will be evidenced by convertible promissory notes (the “2020 Notes”). Subject to the terms and conditions of the 2020 Term Sheet, the Company will use its best efforts to arrange for the 2020 Financing, which amounts will be obtained in several tranches. The proceeds from the 2020 Financing will be used to fund the Company’s clinical development program, as currently constituted and envisioned, and to fund the Company’s general and administrative expenses.

 

Since the 2020 Financing was launched and through June 30, 2020, the Company had received aggregate Loans of $2,575,000.

 

The Series D Preferred Stock

 

As of June 30, 2020, and through the date of filing, the Series D Preferred Stock had not been designated by the Board. Per the terms of the notes issued in connection with the 2017 and 2020 Financings, if the Company has not designated the Series D Preferred Stock or if an insufficient number of Series D Preferred shares exist upon a conversion by a note holder, then the outstanding loans will continue to accrue interest at a rate of 8% per annum until which time the Company has designated a sufficient number of Series D Preferred shares. As a result, the Company did not analyze the notes for a potential beneficial conversion feature as the definition of a firm commitment has not been met since the notes were not convertible as of their respective dates of issuance or as of June 30, 2020.

 

Convertible Notes Payable – Related Parties

 

During the six months ended June 30, 2020, the Company entered into additional related party 2020 Notes in the aggregate principal amount of $100,000. As of June 30, 2020, the Company had borrowed $100,000 under these notes.

 

Convertible Notes Payable – Non-Related Parties

 

During the six months ended June 30, 2020, the Company entered into additional non-related party 2020 Notes in the aggregate principal amount of $2,375,000. As of June 30, 2020, the Company had borrowed $2,475,000   under these notes.

 

Notes Payable

 

On April 20, 2020, the Company received a $62,500 loan under the CARES Act PPP (the “PPP Loan”). The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times certain of the borrower’s average monthly payroll expenses. The loan principal and accrued interest are forgivable, as long as the borrower uses loan proceeds for eligible uses during a specified period following disbursement, such as payroll, benefits, rent, and utilities, and maintains specified headcount and payroll thresholds. If any portion of a PPP Loan is not forgiven, the unforgiven portion is payable over two years at an interest rate of 1%, with a deferral of payments for the first seven months. The Company intends to use PPP Loan proceeds in a manner that it believes presently qualifies for full forgiveness. We cannot provide assurance that the PPP Loan will be forgiven in full As of June 30, 2020, the Company had not applied for forgiveness of the PPP Loan.   Once an amount is forgiven under the PPP Loan, the Company intends to recognize a gain on forgiveness of note payable in the period in which it obtained forgiveness.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.20.2
Related Party Transactions
6 Months Ended
Jun. 30, 2020
Related Party Transactions [Abstract]  
Related Party Transactions

5. Related Party Transactions

 

During the three and six months ended June 30, 2020, the Company paid Mr. Bruce Horowitz (Capital Strategists) consulting fees of $11,200 and $63,600, respectively, for services rendered. Accrued director fees for Mr. Horowitz as of June 30, 2020 were $37,500.

 

During the three and six months ended June 30, 2019, the Company paid Mr. Bruce Horowitz (Capital Strategists) consulting fees of $61,200 and $171,200, respectively, for services rendered. Accrued director fees for Mr. Horowitz as of June 30, 2019 were $37,500. Mr. Horowitz serves as both COO and a Director.

 

See Note 4 and Note 6 for details of other related party transactions.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.20.2
Receivables
6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Receivables

6. Receivables

 

The following table summarizes the receivables at June 30, 2020 and December 31, 2019:

 

    June 30, 2020  
    Tax Credit     Legal Fees     Settlement     Total  
                         
Provectus Australia Tax Credit   $ 3,777     $ -     $ -     $ 3,777  
Gross receivable     -       455,500       1,649,043       2,104,543  
Reserve for uncollectibility     -       (455,500 )     (1,649,043 )     (2,104,543 )
Net receivable   $ 3,777     $ -     $ -     $ 3,777  

 

    December 31, 2019  
    Tax Credit     Legal Fees     Settlement     Total  
                         
Provectus Australia Tax Credit   $ 55,058     $ -     $ -     $ 55,058  
Gross receivable     -       455,500       1,649,043       2,104,543  
Reserve for uncollectibility     -       (455,500 )     (1,649,043 )     (2,104,543 )
Net receivable   $ 55,058     $ -     $ -     $ 55,058  

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.20.2
Stockholders' Deficiency
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Stockholders' Deficiency

7. Stockholders’ Deficiency

 

Common Stock

 

During the six months ended June 30, 2020, warrant holders exercised warrants to purchase an aggregate of 800,000 shares of common stock at an exercise price of $0.0533 per share. In connection with these exercises, the Company received aggregate cash proceeds of $42,640 and issued 800,000 shares of common stock to the holders. Subsequent to June 30, 2020, the Company received an aggregate $194,438 in connection with a warrant exercise. See Note 10 – Subsequent Events.

 

During the six months ended June 30, 2020, the Company issued an aggregate of 25,000 shares of immediately vested restricted common stock to a consultant with an issuance date fair value of $1,150, which was recognized immediately.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.20.2
Leases
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Leases

8. Leases

 

The Company currently leases 4,500 square feet of corporate office space in Knoxville, Tennessee through an operating lease agreement for a term of five years ending on June 30, 2022. Payments range from approximately $7,300 to $7,800 per month.

 

Total operating lease expense for the three months ended June 30, 2020 was $22,332, of which, $14,888 was included within research and development and $7,444 was included within general and administrative expenses on the condensed consolidated statement of operations. Total operating lease expense for the three months ended June 30, 2019 was $22,329, of which, $14,886 was included within research and development and $7,443 was included within general and administrative expenses on the condensed consolidated statement of operations.

 

Total operating lease expense for the six months ended June 30, 2020 was $43,634, of which, $29,090 was included within research and development and $14,544 was included within general and administrative expenses on the condensed consolidated statement of operations. Total operating lease expense for the six months ended June 30, 2019 was $57,134, of which, $38,089 was included within research and development and $19,045 was included within general and administrative expenses on the condensed consolidated statement of operations. 

 

As of June 30, 2020, the Company had no leases that were classified as a financing lease. As of June 30, 2020, the Company did not have additional operating and financing leases that have not yet commenced. 

 

A summary of the Company’s right-of-use assets and liabilities is as follows:

 

    Six Months Ended June 30, 2020  
       
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flows used in operating leases   $ 44,882  
         
Right-of-use assets obtained in exchange for lease obligations:        
Operating leases   $ -  
         
Weighted Average Remaining Lease Term        
Operating leases     2.0 Years  
         
Weighted Average Discount Rate        
Operating leases     8.0 %

 

Future minimum payments under the Company’s non-cancellable lease obligations as of June 30, 2020 were as follows:

 

Years   Amount  
       
2020     45,784  
2021     92,471  
2022     46,687  
Total future minimum lease payments     184,943  
Less: amount representing imputed interest     (16,819 )
Total   $ 168,123  

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.20.2
Commitments, Contingencies and Litigation
6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments, Contingencies and Litigation

9. Commitments, Contingencies and Litigation

 

Culpepper Travel Expenses and Related Collection Efforts

 

On December 27, 2016, the then-Board of Directors (the “then-Board”) unanimously voted to terminate then-interim Chief Executive Officer, then-Chief Operating Officer, and former Chief Financial Officer, Peter Culpepper (“Culpepper”), effective immediately, from all positions he held with the Company and each of its subsidiaries, “for cause,” in accordance with the terms of the Amended and Restated Executive Employment Agreement entered into by Culpepper and the Company on April 28, 2014 (the “Culpepper Employment Agreement”), based on the results of the investigation conducted by the Audit Committee of the then-Board regarding improper expense reimbursements to Culpepper.

 

The Company took the position that under the terms of the Culpepper Employment Agreement, Culpepper is owed no severance payments as a result of his termination “for cause” as that term is defined in the Culpepper Employment Agreement. Furthermore, Culpepper is no longer entitled to the 2:1 credit under the Stipulated Settlement Agreement and Mutual Release in the Kleba Derivative Lawsuit Settlement (the “Derivative Lawsuit Settlement”) such that the total $2,240,000 owed by Culpepper pursuant to the Derivative Lawsuit Settlement plus Culpepper’s proportionate share of the litigation cost in the amount of $227,750, less the amount that he repaid as of December 31, 2016, is immediately due and payable. The Company sent Culpepper a notice of default in January 2017 for the total amount he owes the Company and is in the process of pursuing these claims in accordance with the alternative dispute resolution provision of the Culpepper Employment Agreement. The Company has established a reserve of $2,104,543 as of June 30, 2020 and December 31, 2019, which amount represents the amount the Company currently believes Culpepper owes to the Company under the Derivative Lawsuit Settlement (excluding the amount of attorneys’ fees incurred in enforcing the terms of the Derivative Lawsuit Settlement), while the Company pursues collection of this amount.

 

Culpepper disputed that he was terminated “for cause” under the Culpepper Employment Agreement. On June 28, 2017, pursuant to the alternative dispute resolution provisions of that agreement, the Company and Culpepper participated in a mediation of their dispute. Having reached no resolution during the mediation, the parties participated in arbitration under the commercial rules of the American Arbitration Association, arbitrating Culpepper’s claim against the Company for severance and the Company’s claims against Culpepper for improper expense reimbursements and amounts Culpepper owed the Company under the Derivative Lawsuit Settlement. On September 12, 2018, the arbitrator issued his final award in favor of the Company.

 

On October 4, 2018, the Company filed a petition with the Chancery Court for Davidson County, Tennessee to confirm the arbitration award. On January 23, 2019, the Chancery Court entered an order confirming the arbitrator’s award. On February 20, 2019, Culpepper filed a motion to alter or amend the Chancery Court’s judgment. On March 22, 2019, the Chancery Court upheld the arbitration award in favor of the Company.

 

On April 16, 2019, Culpepper filed a Notice of Appeal with the Tennessee Court of Appeals regarding the Chancery Court’s judgment. The Company and Culpepper submitted their respective court of appeal briefs on November 12, 2019 and December 3, 2019, respectively. Oral arguments were held on January 7, 2020. On April 14, 2020, the Court of Appeals affirmed the Chancery Court’s judgment and awarded court costs to the Company.

 

On June 16, 2020, Culpepper filed an application to the Supreme Court of Tennessee for permission to appeal the Court of Appeals’ final decision. On June 30, 2020, the Company filed an answer to the Supreme Court in opposition to Culpepper’s application for permission to appeal. On August 5, 2020, the Supreme Court denied Culpepper’s application.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.20.2
Subsequent Events
6 Months Ended
Jun. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events

10. Subsequent Events

 

Convertible Notes Payable

 

Subsequent to June 30, 2020, the Company entered into a 2020 Note with a non-related party in the aggregate principal amount of $450,000 in connection with a 2nd Loan received by the Company for the same amount.

 

Exercise of Warrants

 

Subsequent to June 30, 2020, a warrant holder exercised warrants to purchase an aggregate of 3,648,000 shares of common stock at $0.0533 per share. In connection with this exercise, the Company received aggregate cash proceeds of $194,438.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.20.2
Critical Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Recently Issued Accounting Standards

Recently Issued Accounting Standards

 

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-03, Codification Improvements to Financial Instruments. There are seven issues addressed in this update. Issues 1 – 5 were clarifications and codifications of previous updates. Issue 3 relates only to depository and lending institutions and therefore would not be applicable to the Company. Issue 6 was a clarification on determining the contractual term of a net investment in a lease for purposes of measuring expected credit losses, an issue not applicable to the Company. Issue 7 relates to the regaining control of financial assets sold and the recordation of an allowance for credit losses. The amendment related to issues 1, 2, 4 and 5 became effective immediately upon adoption of the update. Issue 3 becomes effective for fiscal years beginning after December 15, 2019. Issues 6 and 7 become effective on varying dates that relate to the dates of adoption of other updates. Management’s initial analysis is that it does not believe the new guidance will substantially impact the Company’s financial statements. The Company adopted certain provisions which have become effective during fiscal 2020 within ASU 2020-03 and its adoption did not have a material impact on the Company’s condensed consolidated financial statements and financial statement disclosures. The Company is currently evaluating the effect that adopting the remaining new accounting guidance will have on its condensed consolidated financial statements and related disclosures.

 

The CARES Act

 

On March 27, 2020, President Trump signed the CARES Act into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. Under ASC 740 of GAAP, the effects of new legislation are recognized upon enactment. Accordingly, the CARES Act is effective beginning in the quarter ended March 31, 2020. The adoption of the CARES Act provisions did not have a material impact on the Company’s condensed consolidated financial statements.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.20.2
Receivables (Tables)
6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Summary of Receivables

The following table summarizes the receivables at June 30, 2020 and December 31, 2019:

 

    June 30, 2020  
    Tax Credit     Legal Fees     Settlement     Total  
                         
Provectus Australia Tax Credit   $ 3,777     $ -     $ -     $ 3,777  
Gross receivable     -       455,500       1,649,043       2,104,543  
Reserve for uncollectibility     -       (455,500 )     (1,649,043 )     (2,104,543 )
Net receivable   $ 3,777     $ -     $ -     $ 3,777  

 

    December 31, 2019  
    Tax Credit     Legal Fees     Settlement     Total  
                         
Provectus Australia Tax Credit   $ 55,058     $ -     $ -     $ 55,058  
Gross receivable     -       455,500       1,649,043       2,104,543  
Reserve for uncollectibility     -       (455,500 )     (1,649,043 )     (2,104,543 )
Net receivable   $ 55,058     $ -     $ -     $ 55,058  

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.20.2
Leases (Tables)
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Schedule of Right-of-use Assets and Liabilities

A summary of the Company’s right-of-use assets and liabilities is as follows:

 

    Six Months Ended June 30, 2020  
       
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flows used in operating leases   $ 44,882  
         
Right-of-use assets obtained in exchange for lease obligations:        
Operating leases   $ -  
         
Weighted Average Remaining Lease Term        
Operating leases     2.0 Years  
         
Weighted Average Discount Rate        
Operating leases     8.0 %

Schedule of Future Minimum Payments Under Non-cancellable Lease

Future minimum payments under the Company’s non-cancellable lease obligations as of June 30, 2020 were as follows:

 

Years   Amount  
       
2020     45,784  
2021     92,471  
2022     46,687  
Total future minimum lease payments     184,943  
Less: amount representing imputed interest     (16,819 )
Total   $ 168,123  

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.20.2
Liquidity and Going Concern (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Apr. 20, 2020
Aug. 07, 2020
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Cash and cash equivalents     $ 1,483,214   $ 590,706
Proceeds from warrant exercise     42,640 $ 5,330  
Subsequent Event [Member]          
Proceeds from warrant exercise   $ 194,438      
Subsequent Event [Member] | 2020 Financing [Member]          
Loans received in connection with financing   $ 450,000      
Paycheck Protection Program [Member] | The CARES Act [Member]          
Loans received in connection with financing $ 62,500   62,500    
Economic Injury Disaster Loan [Member]          
Loans received in connection with financing     $ 3,000    
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.20.2
Convertible Notes Payable (Details Narrative) - USD ($)
6 Months Ended
Apr. 20, 2020
Jun. 30, 2020
Dec. 31, 2019
Related Party Transaction [Line Items]      
Borrowed outstanding convertible notes payable   $ 15,872,000 $ 500,000
Paycheck Protection Program [Member] | The CARES Act [Member]      
Related Party Transaction [Line Items]      
Proceeds from loans $ 62,500 62,500  
Interest rate 1.00%    
Debt instrument description The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times certain of the borrower's average monthly payroll expenses.    
Debt instrument term 2 years    
2020 Notes [Member] | Non-Related Party [Member]      
Related Party Transaction [Line Items]      
Debt principal amount   2,375,000  
Borrowed outstanding convertible notes payable   2,475,000  
2020 Notes [Member] | Related Party [Member]      
Related Party Transaction [Line Items]      
Debt principal amount   100,000  
Borrowed outstanding convertible notes payable   100,000  
2020 Financing [Member]      
Related Party Transaction [Line Items]      
Proceeds from loans   $ 2,575,000  
2020 Financing [Member] | Maximum [Member]      
Related Party Transaction [Line Items]      
Financing arrangement amount     $ 20,000,000
2017 and 2020 Financings [Member]      
Related Party Transaction [Line Items]      
Interest rate   8.00%  
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.20.2
Related Party Transactions (Details Narrative) - Mr Bruce Horowitz [Member] - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Consulting fees $ 11,200 $ 61,200 $ 63,600 $ 171,200
Accrued director fees $ 37,500 $ 37,500 $ 37,500 $ 37,500
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.20.2
Receivables - Summary of Receivables (Details) - USD ($)
Jun. 30, 2020
Dec. 31, 2019
Tax credit $ 3,777 $ 55,058
Gross receivable 2,104,543 2,104,543
Reserve for uncollectibility (2,104,543) (2,104,543)
Net receivable 3,777 55,058
Legal Fees [Member]    
Tax credit
Gross receivable 455,500 455,500
Reserve for uncollectibility (455,500) (455,500)
Net receivable
Settlement [Member]    
Tax credit
Gross receivable 1,649,043 1,649,043
Reserve for uncollectibility (1,649,043) (1,649,043)
Net receivable
Provectus Australia [Member]    
Tax credit 3,777 55,058
Gross receivable
Reserve for uncollectibility
Net receivable $ 3,777 $ 55,058
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.20.2
Stockholders' Deficiency (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Aug. 07, 2020
Jun. 30, 2020
Jun. 30, 2019
Class of Stock [Line Items]      
Proceeds from warrant exercise   $ 42,640 $ 5,330
Subsequent Event [Member]      
Class of Stock [Line Items]      
Warrant to purchase common stock 3,648,000    
Warrant exercise price $ 0.0533    
Proceeds from warrant exercise $ 194,438    
Warrant Holders [Member]      
Class of Stock [Line Items]      
Warrant to purchase common stock   800,000  
Warrant exercise price   $ 0.0533  
Aggregate cash proceeds   $ 42,640  
Common stock issued   800,000  
Consultant [Member]      
Class of Stock [Line Items]      
Number of restricted common stock issued   25,000  
Number of restricted common stock issued, value   $ 1,150  
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.20.2
Leases (Details Narrative)
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
ft²
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
ft²
Jun. 30, 2019
USD ($)
Leases payments, per month     $ 44,882  
Lease expense $ 22,332 $ 22,329 43,634 $ 57,134
Research and Development Expense [Member]        
Lease expense 14,888 14,886 29,090 38,089
General and Administrative Expense [Member]        
Lease expense $ 7,444 $ 7,443 $ 14,544 $ 19,045
Knoxville, Tennessee [Member]        
Area of land | ft² 4,500   4,500  
Lease term 5 years   5 years  
Lease expiration date     Jun. 30, 2022  
Knoxville, Tennessee [Member] | Minimum [Member]        
Leases payments, per month     $ 7,300  
Knoxville, Tennessee [Member] | Maximum [Member]        
Leases payments, per month     $ 7,800  
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.20.2
Leases - Schedule of Right-of-use Assets and Liabilities (Details)
6 Months Ended
Jun. 30, 2020
USD ($)
Leases [Abstract]  
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 44,882
Right-of-use assets obtained in exchange for lease obligations: Operating leases
Weighted Average Remaining Lease Term: Operating leases 2 years
Weighted Average Discount Rate: Operating leases 8.00%
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.20.2
Leases - Schedule of Future Minimum Payments Under Non-cancellable Lease (Details)
Jun. 30, 2020
USD ($)
Leases [Abstract]  
2020 $ 45,784
2021 92,471
2022 46,687
Total future minimum lease payments 184,943
Less: amount representing imputed interest (16,819)
Total $ 168,123
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.20.2
Commitments, Contingencies and Litigation (Details Narrative) - Culpepper Employment Agreement [Member] - Peter Culpepper [Member] - USD ($)
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Damages sought to be receivable $ 2,240,000  
Litigation cost 227,750  
Litigation reserve $ 2,104,543 $ 2,104,543
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.20.2
Subsequent Events (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Aug. 07, 2020
Jun. 30, 2020
Jun. 30, 2019
Proceeds from warrant exercise   $ 42,640 $ 5,330
Subsequent Event [Member]      
Warrant to purchase common stock 3,648,000    
Warrant exercise price $ 0.0533    
Proceeds from warrant exercise $ 194,438    
Subsequent Event [Member] | 2020 Financing [Member]      
Proceeds from loans $ 450,000    
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