PROVECTUS BIOPHARMACEUTICALS INC

Previous wording

The Company’s small molecule HX medical science platform, which comprises several different drug candidates and preclinical formulations made from pharmaceutical-grade RBS using different concentrations and delivered by different routes of administration specific to each disease area and/or indication, includes:

Current wording

The Company’s small molecule HX medical science platform, which comprises different drug candidates and non-clinical formulations made from pharmaceutical-grade RBS using different concentrations and delivered by different routes of administration specific to each disease and/or disease indication, includes:

Previous wording

The Company is developing different formulations of pharmaceutical-grade RBS using different concentrations and different routes of administration (e.g., PO, IV, IN) for other disease areas by endeavoring to show preclinical activity and lack of toxicity. Our goals, when each task of this work is completed, are to file an IND with the FDA, take an initial drug candidate into an early-stage clinic trial for an initial indication, and/or pursue a co-development collaboration or out-license arrangement for the respective disease area and route of administration.

Current wording

The Company is developing different formulations of pharmaceutical-grade RBS using different concentrations and different routes of administration (e.g., PO, IV, IN) for other disease areas by endeavoring to show non-clinical activity and lack of toxicity. Our goals, when each task of this work is completed, are to file an IND with the FDA, take an initial drug candidate into an early-stage clinic trial for an initial indication, and/or pursue a co-development collaboration or out-license arrangement for the respective disease area and route of administration.

Previous wording

The RBS name for the Company’s pharmaceutical-grade API was selected by and passed the review of the World Health Organization (“WHO”) Expert Advisory Panel on the International Pharmacopoeia and Pharmaceutical Preparations after the Company applied for the non-proprietary name in the third quarter of 2020 and reached the status of recommended International Nonproprietary Names (“INN”). INN Recommended List 88, which includes the RBS name, was published with the No. 3 issue of the WHO Drug Information, Volume 36 in the fourth quarter of 2022.

Current wording

The RBS name for the Company’s pharmaceutical-grade API was selected by and passed the review of the World Health Organization (“WHO”) Expert Advisory Panel on the International Pharmacopoeia and Pharmaceutical Preparations after the Company applied for the non-proprietary name in the third quarter of 2020 and reached the status of recommended International Non-proprietary Names (“INN”). INN Recommended List 88, which includes the RBS name, was published with the No. 3 issue of the WHO Drug Information, Volume 36 in the fourth quarter of 2022.

Previous wording

This material may be purchased from specialty chemical suppliers in the U.S. and from other parts of the world; however, the Company believes that the material itself is almost exclusively made in China and India under non-cGMP conditions. Commercial grade rose bengal appears to have reported purity that may vary between approximately 80% and 95%, and that may contain substantial amounts of unreported impurities and/or gross contaminants. Commercial grade rose bengal is typically used by researchers unaffiliated with the Company for preclinical study of the rose bengal molecule for potential biomedical therapeutic applications.

Current wording

This material may be purchased from specialty chemical suppliers in the U.S. and from other parts of the world; however, the Company believes that the material itself is almost exclusively made in China and India under non-cGMP conditions. Commercial grade rose bengal appears to have reported purity that may vary between approximately 80% and 95%, and that may contain substantial amounts of unreported impurities and/or gross contaminants. Commercial grade rose bengal is typically used by researchers unaffiliated with the Company for non-clinical study of the rose bengal molecule for potential biomedical therapeutic applications.

Previous wording

For the three months ended March 31, 2024 and March 31, 2023, there was $238,072 and $205,025, respectively, of grant revenue recognized related to qualifying expenses that were incurred and included within research and development expenses on the condensed consolidated statements of operations.

Current wording

For the three months ended June 30, 2024 and June 30, 2023, there was $254,991 and $161,842, respectively, of grant revenue recognized related to qualifying expenses that were incurred and included within research and development expenses on the condensed consolidated statements of operations.

Previous wording

Research and development expenses were $555,535 for the three months ended March 31, 2024, a decrease of $7,142 or 1.3% compared to $548,393 for the three months ended March 31, 2023. The decrease was primarily due to (i) lower insurance costs, partially offset by (ii) higher clinical trial costs associated with study closure, and (iii) higher payroll and taxes.

Current wording

Research and development expenses were $472,927 for the three months ended June 30, 2024, an increase of $38,713 or 8.9% compared to $434,214 for the three months ended June 30, 2023. The increase was primarily due to (i) higher clinical trial costs associated with study closure, and (ii) increased insurance costs.

Previous wording

Net interest expense increased by $11,536 or 25.5% from $45,241 for the three months ended March 31, 2023 to $56,777 for the three months ended March 31, 2024. The increase was mainly due to the interest expense costs incurred in connection with the higher notes payable balances.

Current wording

Interest expense increased by $10,471 or 20.6% from $50,824 for the three months ended June 30, 2023 to $61,295 for the three months ended June 30, 2024. The increase was mainly due to the interest expense costs incurred in connection with the higher notes payable and convertible debt balances.

Previous wording

Grant revenue was $238,072 for the three months ended March 31, 2024, an increase of $33,047 or 16.1% compared to the three months ended March 31, 2023. Total operating expenses were $685,337 for the three months ended March 31, 2024, a decrease of $301,901 or 30.6% compared to the three months ended March 31, 2023. The decrease was driven primarily by (i) reduced professional fees, (ii) decrease in director fees due to write-off of Bruce Horowitz accrued fees, partially offset by (iii) higher clinical trial costs related to study closure, (iv) increased payroll and taxes, (v) higher legal costs related to patents and general corporate counsel, and (vi) higher other general and administrative cost. Net loss for the three months ended March 31, 2024 was $504,042, a decrease of $323,412 or 39.1% compared to the three months ended March 31, 2023.

Current wording

Grant revenue was $493,063 for the six months ended June 30, 2024, an increase of $126,196 or 34.4% compared to the six months ended June 30, 2023. Total operating expenses were $1,735,182 for the six months ended June 30, 2024, a decrease of $214,101 or 11.0% compared to the six months ended June 30, 2023. The decrease was driven primarily by (i) reduced directors’ fees and professional fees due to the resignation of Bruce Horowitz, our former Chief Operating Officer, partially offset by (ii) higher clinical trial costs related to study closure, (iii) increased payroll and taxes due to the addition of two new officers, (iv) higher legal costs related to patents and general corporate counsel, and (v) higher other general and administrative cost. Net loss for the six months ended June 30, 2024 was $1,350,890, a decrease of $311,626 or 18.7% compared to the six months ended June 30, 2023.

Previous wording

General and administrative expenses were $129,802 for the three months ended March 31, 2024, a decrease of $309,043 or 70.4% compared to $438,845 for the three months ended March 31, 2023. The decrease was primarily due to (i) lower professional fees, (ii) reversal of director fees for Mr. Horowitz upon his resignation on March 25, 2024, partially offset by (iii) higher legal fees related to patents and corporate matters pertaining to the 2024 proxy statement and officer’s resignation, and (iv) higher other general and administrative costs.

Current wording

General and administrative expenses were $706,720 for the six months ended June 30, 2024, a decrease of $259,956 or 26.9% compared to $966,676 for the six months ended June 30, 2023. The decrease was primarily due to (i) lower directors’ fees and professional fees due to the resignation of Bruce Horowitz, our prior Chief Operating Officer partially offset by (ii) higher legal fees related to patents and corporate matters pertaining to the 2024 proxy statement and officer’s resignation, (iii) higher payroll and taxes due to addition of two new officers, and (iv) higher other general and administrative costs due to a refund received in 2023 for employee retention.

Previous wording

The Company’s cash and restricted cash were $762,752 at March 31, 2024 which includes $744,717 of restricted cash resulting from a grant received from the State of Tennessee, compared to $1,026,799 at December 31, 2023, which included $950,223 of restricted cash. The Company’s working capital deficit was $7,507,105 and $7,652,098 as of March 31, 2024 and December 31, 2023, respectively. 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 $253,194,451 as of March 31, 2024. 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.

Current wording

The Company’s cash and restricted cash were $589,283 at June 30, 2024 which includes $559,702 of restricted cash resulting from a grant received from the State of Tennessee, compared to $1,026,799 at December 31, 2023, which included $950,223 of restricted cash. The Company’s working capital deficit was $7,569,256 and $7,652,098 as of June 30, 2024 and December 31, 2023, respectively. We have continuing net losses and negative cash flows from operating activities. In addition, we have an accumulated deficit of $254,041,299 as of June 30, 2024. 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. 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. 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.

Previous wording

As of March 31, 2024, cash required for our current liabilities included approximately $4,515,249 for accounts payable and other accrued expenses (including operating lease liabilities) and a $190,910 note payable related to our short-term financing of our commercial insurance policies. Also, if not converted prior to maturity, convertible debt in the amount of $2,943,000 plus accrued interest will mature one year from the date of the notes. As of March 31, 2024, cash required for our long-term liabilities consists of $12,729 for our operating lease. The Company intends to meet these cash requirements from its current cash balance and from future financing.

Current wording

As of June 30, 2024, cash required for our current liabilities included approximately $4,760,347 for accounts payable and other accrued expenses (including operating lease liabilities) and a $109,862 note payable related to our short-term financing of our commercial insurance policies. Also, if not converted prior to maturity, convertible debt in the amount of $2,888,000 plus accrued interest will mature one year from the date of the notes. The Company intends to meet these cash requirements from its current cash balance and from future financing.

Previous wording

The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, there can be no assurance that management will be successful in implementing the Company’s business plan of developing, licensing, and/or commercializing our prescription drug 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 2024 and beyond. We anticipate that these funds will otherwise come from the proceeds of private placement transactions, 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, there can be no assurance that we will be able to obtain funds on commercially acceptable terms, or complete additional financing in a timely manner. In addition, any such financing may result in significant dilution to stockholders.

Current wording

The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, there can be no assurance that management will be successful in implementing the Company’s business plan of developing, licensing, and/or commercializing our prescription drug 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 2024 and beyond. We anticipate that these funds will otherwise come from the proceeds of private placement transactions, the exercise of 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, there can be no assurance that we will be able to obtain funds on commercially acceptable terms, or complete additional financing in a timely manner. In addition, any such financing may result in significant dilution to stockholders.

Previous wording

We prepare our consolidated financial statements in accordance with U.S. GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

Current wording

We prepare our condensed consolidated financial statements in accordance with U.S. GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.