PROVECTUS BIOPHARMACEUTICALS, INC.

1. Business Organization and Nature of Operations

Provectus Biopharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, “Provectus” or “the Company”), is a clinical-stage biotechnology company developing immunotherapy medicines for different diseases based on a class of bioactive synthetic small molecule halogenated xanthenes (“HXs”). Our lead HX molecule is named rose bengal sodium (“RBS”).

The Company’s proprietary, patented, pharmaceutical-grade RBS is the active pharmaceutical ingredient (“API”) in the drug candidates of our current clinical development programs and the formulations of our current non-clinicalin vivo proof-of-concept andin vitro early discovery programs. Importantly, our pharmaceutical-grade RBS displays different therapeutic effects at different concentrations and can be formulated for delivery by different routes of administration.

The Company believes that RBS targets disease in a bifunctional multi-modal manner. Direct contact by RBS with disease may lead to cell death or repair, depending on the disease being treated and the concentration of RBS being utilized in the therapeutic formulation, by one or more targeting mechanisms. Multivariate innate and adaptive immune activation, signaling, and response may follow that may manifest as stimulatory, inhibitory, or both.

The Company believes that it is the first entity to advance an RBS formulation into clinical trials for the treatment of a disease, such as those trials reported on the clinical trials registry at ClinicalTrials.gov. The Company believes that it is the first and only entity to date to make pharmaceutical-grade RBS successfully, reproducibly, and consistently at a purity of nearly 100%.

The Company’s small molecule platform comprises several different drug candidates and non-clinical targets using different concentrations delivered by different routes of administration specific to each disease area and/or disease indication, including:

Risks and Uncertainties

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.

***2. Liquidity and Going Concern ***

To date, the Company has not generated any revenues or profits from planned principal operations.

The Company’s aggregate cash and restricted cash balance was $489,726 at December 31, 2024 which includes $182,284 of restricted cash resulting from a grant received from the State of Tennessee. The Company’s working capital deficiency was $5,998,712 and $7,652,098 as of December 31, 2024 and 2023, respectively, Net loss for the years ended December 31, 2024 and 2023 were $4,762,137 and $3,101,768, respectively, and cash used in operations was $3,284,091 and $2,571,978 for the years ended December 31, 2024 and 2023, respectively. Since the Company’s inception, there has been a history of recurring net losses from operations, recurring use of cash in operating activities and working capital deficits.

Future cash requirements for our current liabilities include approximately $3.3 million for accounts payable and accrued expenses, approximately $0.2 million for notes payable and approximately $26,000 for future payments under operating leases. The Company continues to incur significant operating losses. Further, 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 consolidated financial statements are issued.

The Company plans to access capital resources through possible public or private equity offerings, including additional convertible debt issuance pursuant to the 2025 Financing (see Note 5 and Note 10), exchange offers, debt financings, corporate collaborations, or other means. In addition, the Company continues to explore opportunities to strategically monetize its lead drug candidates, PV-10 and 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 there can be no assurance that it will continue to be successful in the future. If the Company is unable to raise sufficient capital, it will not be able to pay its obligations as they become due.

Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet future financial obligations as they become due within one year after the date that these financial statements are issued. The accompanying consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment that might become necessary should the Company be unable to continue as a going concern.

These factors raise substantial doubt about the Company’s our ability to continue as a going concern. Management’s plans to mitigate the factors which raise substantial doubt include (1) raising funds from the proceeds of private placement transactions, the exercise of outstanding stock options, or public offerings of debt or equity securities, and (2) monetizing the Company’s lead drug candidates. 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 provide assurance that such financing will be available when needed or on acceptable terms, or 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.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

3. Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the consolidated results of Provectus, its wholly owned subsidiaries, and its newly created majority-owned subsidiary, VisiRose (see Note 16). The interests of non-controlling shareholders in VisiRose are presented as net income attributable to noncontrolling interest in the Consolidated Statements of Operations and as noncontrolling interest in the Consolidated Balance Sheets. Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, accrued liabilities and the valuation allowance related to the Company’s deferred tax assets.

Restricted Cash

Restricted cash consists of a grant award received from the State of Tennessee. Restricted cash available as of December 31, 2024 is $182,284. See Note 15, Grants.

Cash Concentrations

Cash and restricted cash are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000, although the Company seeks to minimize this through treasury management. The Company has never experienced any losses related to these balances although no assurance can be provided that it will not experience any losses in the future. As of December 31, 2024 and 2023, the Company had cash and restricted cash balances in excess of FDIC insurance limits of $239,726 and $776,799, respectively.

Equipment and Furnishings, net

Equipment and furnishings are stated at cost less accumulated depreciation. Depreciation of equipment is provided for using the straight-line method over the estimated useful lives of the assets. Computers and office equipment are being depreciated over five years; furniture and fixtures are being depreciated over ten years. Leasehold improvements are amortized over the lesser of (a) the useful life of the asset; or (b) the remaining lease term. Maintenance and repairs are charged to operations as incurred. The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets.

Long-Lived Assets

The Company reviews the carrying values of its long-lived assets for possible impairment whenever an event or change in circumstances indicates that the carrying amount of the assets may not be recoverable. Any long-lived assets held for disposal are reported at the lower of their carrying amounts or fair value less cost to sell. Management has determined there to be no impairment of its long-lived assets during the years ended December 31, 2024 and 2023.

Short-term Receivables

Management estimates expected credit losses immediately based on existing economic conditions in addition to current and future economic conditions and events. Receivables are considered past due if full payment is not received by the contractual date. Past due amounts are generally written off against the reserve for uncollectibility only after all collection attempts have been exhausted. As of December 31, 2024 and 2023, there was no allowance for uncollectible amounts.

Grant Revenue

Grant revenue is recognized when qualifying costs are incurred and there is reasonable assurance that the conditions of the grant have been met. Cash received from grants in advance of incurring qualifying costs is recorded as unearned grant revenue and recognized as grant revenue when qualifying costs are incurred.

Research and Development

Research and development costs are charged to expense when incurred. An allocation of payroll expenses to research and development is made based on a percentage estimate of time spent. The research and development costs include the following: payroll, consulting and contract labor, lab supplies and pharmaceutical preparations, insurance, rent and utilities, and depreciation and amortization.

Patent Costs

The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses in the accompanying statements of operations.

Leases

The Company leases properties under operating leases. The Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset” upon the commencement of a lease. The lease liability is measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset.

Income Taxes

The Company accounts for income taxes under the liability method in accordance with Accounting Standards Codification (“ASC”) 740 “Income Taxes”. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established if it is more likely than not that all, or some portion, of deferred income tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, an adjustment to the deferred income tax asset would increase income in the period such determination was made.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination. Any recognized income tax positions would be measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement would be reflected in the period in which the change in judgment occurs. The Company would recognize any corresponding interest and penalties associated with its income tax positions in income tax expense. There were no income taxes, interest or penalties incurred in 2024 or 2023.

Convertible Instruments

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with ASC Topic 815:Derivatives and Hedging. The accounting treatment of derivative financial instruments requires that the Company record qualifying embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Embedded conversion options classified as derivative liabilities and any related equity classified freestanding instruments are recorded as a discount to the host instrument.

Preferred Stock

The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as equity.

Basic and Diluted Loss Per Common Share

Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company determines the estimated fair value of amounts presented in these consolidated financial statements using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in the financial statements are not necessarily indicative of the amounts that could be realized in a current exchange between buyer and seller. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. These fair value estimates were based upon pertinent information available as of December 31, 2024 and 2023. The carrying amounts of the Company’s financial assets and liabilities, such as cash, restricted cash, receivables, other current assets, accounts payable, unearned grant income, and accrued expenses approximate fair value due to the short-term nature of these instruments.

The carrying amounts of our credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates are comparable to rates of returns for instruments of similar credit risk.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in historical company data) inputs. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

Foreign Currency Translation

The Company’s reporting currency is the United States Dollar. The functional currencies of the Company’s operating subsidiaries are their local currencies (United States Dollar and Australian Dollar). Australian Dollar denominated assets and liabilities of $7,295 and$1,020 at December 31, 2024 and $13,916 and $8,810 at December 31, 2023, respectively are translated into the United States Dollar at the balance sheet date, and net expense accounts of ($1,745)and $9,763 for the years ended December 31, 2024 and 2023, respectively are translated at a weighted average exchange rate for the years then ended. Equity is translated at historical rates and the resulting foreign currency translation adjustments are included as a component of accumulated other comprehensive loss (“AOCL”), which is a separate component of stockholders’ deficit. Therefore, the U.S. dollar value of the non-equity translated items in the Company’s consolidated financial statements will fluctuate from period to period, depending on the changing value of the U.S. dollar versus these currencies.

The Company engages in foreign currency denominated transactions with its Australian subsidiary. At the date that the transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured and recorded in the functional currency of the recording entity using the exchange rate in effect at that date. At each balance sheet date, recorded monetary balances denominated in a currency other than the functional currency are adjusted using the exchange rate at the balance sheet date, with gains or losses recorded in other income or other expense.

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and then is recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The Company computes the fair value of equity-classified options granted using the Black-Scholes option pricing model. Option valuation models require the input of highly subjective assumptions including the expected volatility factor of the market price of the Company’s common stock which is determined by reviewing its historical public market closing prices.

Segment

The Company has one operating and reporting segment (clinical stage biotechnology), namely, the development of immunotherapy medicines. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The chief operating decision maker (“CODM”), who is the Company’s chief executive officer, utilizes the Company’s financial information on an aggregate, consolidated basis for purposes of making operating decisions, allocating resources and assessing financial performance, as well as for making strategic operations decisions and managing the organization. The CODM is not regularly provided with disaggregated expense information, other than the expense information included in the consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the balance sheet as total assets.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for the Company for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-09.

In November 2024, the FASB issued ASU 2024-03,Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures. ASU 2024-03 is intended to improve disclosures about a public business entity’s expenses and provide more detailed information to investors about the types of expenses in commonly presented expense captions. The amendments in this ASU will be applied retrospectively and are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of implementing this guidance.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” These amendments require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reporting segment are required to provide both the new disclosures and all of the existing disclosures required under ASC 280. The amendments in ASU2023-07 require, among other things, disclosure of significant segment expenses that are regularly provided to an entity’s chief operating decision maker (“CODM”) and a description of other segment items (the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment, as well as disclosure of the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Annual disclosures are required for fiscal years beginning after December 15, 2023 and interim periods are required for periods within fiscal years beginning after December 15, 2024. The Company has adopted this guidance on December 31, 2024, which did not have an impact on its financial position, results of operations, or cash flows, although it did result in expanded reportable segment disclosures,

4. Other Accrued Expenses

The following table summarizes the other accrued expenses at December 31, 2024 and 2023:

5. Convertible Notes Payable

The following summarizes convertible note activity during the years ended December 31, 2024 and 2023:

As of December 31, 2024 and December 31, 2023, accrued interest on the convertible notes was $172,687 and $146,428, respectively.

Related party investors in the Company’s convertible notes consist of an officer and an officer/director of the Company.

2021 Financing

The 2021 Financing is in the form of unsecured convertible notes (individually, a “2021 Note” and collectively, the “2021 Notes”). Pursuant to the 2021 Term Sheet, the 2021 Notes will either be paid back, convert into shares of the Company’s Series D-1 Preferred Stock, or convert into Company equity securities and/or debt instruments of certain future financings on or before twelve months after the issue date of a 2021 Note, subject to certain exceptions.

In addition to customary provisions, the 2021 Notes contain the following provisions:

The embedded conversion options associated with the 2021 Notes do not require bifurcation and treatment as a derivative liability.

On September 20, 2022, the Board approved the closure of the 2021 Financing.

During the year ended December 31, 2024, the Company repaid $100,000 of principal owed on the 2021 Note. As of December 31, 2024, principal and interest in the amount of $100,000 and $51,444, respectively, remains outstanding on the 2021 Note.

During the year ended December 31, 2023, principal and interest in the aggregate amount of $945,464, owed in connection with the 2021 Notes were converted into 330,354 shares of Series D-1 Preferred Stock at the Conversion Price of $2.862 per share. Any fractional shares issuable pursuant to the formula were rounded up to the next whole share of Series D-1 Preferred Stock. See Note 10, Stockholders’ Deficit for additional information on the Series D-1 Preferred Stock.

For the years ended December 31, 2024 and 2023, the Company recorded interest expense of $13,400 and $46,189, respectively, related to the 2021 Notes.

2022 Financing

Pursuant to the 2022 Term Sheet, the 2022 Notes (defined below) will convert into shares of the Company’s Series D-1 Preferred Stock twelve months after the issue date of a 2022 Note, subject to certain exceptions.

The 2022 Financing is in the form of unsecured convertible promissory notes (individually, a “2022 Note” and collectively, the “2022 Notes”). In addition to customary provisions, the 2022 Notes will contain the following provisions:

The embedded conversion options associated with the 2022 Notes do not require bifurcation and treatment as a derivative liability.

On July 11, 2024, the Board approved the closure of the 2022 Financing.

During the year ended December 31, 2024, principal and interest in the aggregate amount of $2,674,224, owed in connection with the 2022 Notes were converted into 934,398 shares of Series D-1 Preferred Stock at the Conversion Price of $2.862 per share. During the year ended December 31, 2023, principal and interest in the aggregate amount of $813,099, owed in connection with the 2022 Notes were converted into 284,117 shares of Series D-1 Preferred Stock at the Conversion Price of $2.862 per share. Any fractional shares issuable pursuant to the formula were rounded up to the next whole share of Series D-1 Preferred Stock. See Note 10, Stockholders’ Deficit for additional information on the Series D-1 Preferred Stock.

As of December 31, 2024, principal and interest in the amount of $1,638,000 and $95,815, respectively, remains outstanding on the 2022 Note. For the years ended December 31, 2024 and 2023, the Company recorded interest expense of $186,654 and $159,466, respectively, related to the 2022 Notes.

2024 Financing

On July 11, 2024, the Board approved a Financing Term Sheet (the “2024 Term Sheet”), which set forth the terms under which the Company will use its best efforts to arrange for financing of a maximum of $10,000,000 (the “2024 Financing”), which amounts will be obtained in several tranches. Pursuant to the 2024 Term Sheet, the 2024 Notes (defined below) will convert into shares of the Company’s Series D-1 Preferred Stock twelve months after the issue date of a 2024 Note, subject to certain exceptions.

The 2024 Financing is in the form of unsecured convertible promissory notes (individually, a “2024 Note” and collectively, the “2024 Notes”). In addition to customary provisions, the 2024 Notes contain the following provisions:

The embedded conversion options associated with the 2024 Notes do not require bifurcation and treatment as a derivative liability.

As of December 31, 2024, principal and interest in the amount of $1,215,000 and $25,428, respectively, remains outstanding on the 2024 Note. For the year ended December 31, 2024, the Company recorded interest expense of $25,428, related to the 2024 Notes.

On January 15, 2025, the Board approved the closure of the 2024 Financing.

6. Notes Payable

The Company obtained short-term financing from First Insurance Funding in 2024 for our commercial insurance policies. As of December 31, 2024, the balance of the note payable was $206,463. The Company obtained short-term financing from AFCO in 2023 for our commercial insurance policies. As of December 31, 2023, the balance of the note payable was $277,815. For the years ended December 31, 2024 and 2023, the Company recorded interest expense of $13,591 and $5,650, respectively, related to the notes payable.

7. Related Party Transactions

During the years ended December 31, 2024 and 2023, the Company incurred consulting fees of $63,600 and $254,400, for services rendered by Bruce Horowitz (Capital Strategists) a former member of the Board and former Chief Operating Officer (“COO”). As of March 25, 2024, Mr. Horowitz resigned as COO and member of the Board. On March 26, 2024, the Company paid Mr. Horowitz $250,000 and on June 27, 2024, the Company paid $258,000 for outstanding consulting fees.

Director fees for Mr. Horowitz for the years ended December 31, 2024 and 2023 were $0 and $75,000, respectively. Accrued director fees for Mr. Horowitz as of December 31, 2024 and 2023 were $0 and $431,250, respectively. Mr. Horowitz waived the amount of $450,000 due to him in director fees upon his resignation.

On March 25, 2024, the Board retained Dominic Rodrigues as the Company’s interim chief operations consultant pursuant to an Independent Contractor Agreement entered into with Mr. Rodrigues. In this role, Mr. Rodrigues will serve as the Company’s principal executive officer and will be paid $20,000 per calendar month for his services as principal executive officer. During the year ended December 31, 2024, the Company incurred fees of $13,800 for interim consulting services rendered by Mr. Rodrigues. In April 2024, Mr. Rodrigues was hired as an employee to serve in the role of president and principal executive officer.

See Note 5 for details of other related party transactions.

Directors’ fees incurred during the year ended December 31, 2024 and 2023, were $328,750 and $385,000, respectively. In the first quarter of 2024, the Company recognized a net gain of $121,250, primarily attributable to the $450,000 in fees waived by Mr. Horowitz. Accrued directors’ fees as of December 31, 2024 and December 31, 2023 were $77,500 and $2,330,589, respectively.

8. Short-term Receivables

Short-term receivables at December 31, 2024 and 2023, include the Australian VAT tax credit and $2,100,000 that is owed from Peter Culpepper, the former Interim Chief Executive Officer of the Company. The Company has established a reserve of approximately $2,100,000 as of December 31, 2024 and 2023, which represents the amount Culpepper owes to the Company in connection with a derivative lawsuit settlement (excluding the amount of attorneys’ fees incurred in enforcing the terms of the derivative lawsuit settlement).

9. Prepaid Expenses and Other Current Assets

The following table summarizes the pre-paid expenses and other current assets at December 31, 2024 and 2023:

Other current assets at December 31, 2024 include a refund due from the University of Tennessee College of Veterinary Medicine upon termination of contract.

10. Stockholders’ Deficit

Authorized Capital

As of December 31, 2024, the Company was authorized to issue 1,000,000,000 shares of common stock, $0.001 par value, and 25,000,000 shares of preferred stock, $0.001 par value. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows:957,100 shares to Series D Convertible Preferred Stock (the “Series D Preferred Stock”), and 23,042,900 shares of Series D-1 Convertible Preferred Stock (the “Series D-1 Preferred Stock”) and 1,000,000 shares undesignated.

Series D and Series D-1 Preferred Stock

The rights, preferences and privileges of the Series D Preferred Stock and Series D-1 Preferred Stock (collectively, the “D-Series Preferred Stock”) are set forth in their respective Certificates of Designation.

Rank

The Series D Preferred Stock and the Series D-1 Preferred Stock rankpari passu with each other. The D-Series Preferred Stock rank senior to the Common Stock and any other class or series of the Company’s capital stock, the terms of which do not provide that shares of such class rank senior to, orpari passu with, the D-Series Preferred as to dividends and distributions upon a change of control transaction, or the liquidation, winding-up and dissolution of the Company.

Dividends

The D-Series Preferred Stock does not have any dividend preference but are entitled to receive, on apari passu basis, dividends, if any, that are declared and paid on the common stock and any other class of the Company’s capital stock that ranks junior or on par to the D-Series Preferred Stock.

Liquidation Preference

Upon the occurrence of the liquidation, winding-up or dissolution of the Company or certain mergers, corporate reorganizations, or sales of the Company’s assets (each, a “Company Event”), holders of D-Series Preferred Stock will be entitled to receive a liquidation preference before any distributions are made to holders of any other class or series of the Company’s capital stock junior to the D-Series Preferred Stock. If a Company Event occurs within two years of June 20, 2021 (the “Date of Issuance”), the holders of D-Series Preferred Stock will receive, for each share of D-Series Preferred Stock, an amount in cash equal to the Original Issue Price (as defined in the respective Certificates of Designation) multiplied by four. If a Company Event occurs from and after the second anniversary of the Date of Issuance, the holders of D-Series Preferred Stock will receive, for each share of D-Series Preferred Stock, an amount in cash equal to the Original Issue Price multiplied by six. The Original Issue Price for the Series D Preferred Stock is $0.2862, and the Original Issue Price for the Series D-1 Preferred Stock is $2.862.

Voting Rights

Holders of shares of D-Series Preferred Stock will vote together with the holders of common stock as a single class. Each share of Series D Preferred Stock carries the right to one vote per share. Each share of Series D-1 Preferred Stock carries the right to ten votes per share.

The Company is not permitted to amend, alter or repeal its Certificate of Incorporation or bylaws in a manner adverse to the relative rights, preferences, qualifications, limitations or restrictions of the D-Series Preferred Stock without the affirmative vote of a majority of the votes entitled to be cast by holders of outstanding shares of D-Series Preferred Stock, voting together as a single class with each share of D-Series Convertible Preferred Stock having a number of votes equal to the number of shares of common stock then issuable upon conversion of such share of D-Series Preferred Stock.

Conversion

The Series D Preferred Stock is convertible at the option of the holders thereof into shares of common stock based on a one-for-one conversion ratio. The Series D-1 Preferred Stock is convertible at the option of the holders thereof into shares of common stock based on a one-for-ten conversion ratio. The conversion ratio of the D-Series Preferred Stock is subject to adjustment for stock splits and combinations, recapitalizations, reclassifications, reorganizations, mergers, and consolidations. The D-Series Preferred Stock will automatically convert into shares of common stock upon the fifth anniversary of the date of issuance.

Preferred Stock Issuances

During the year ended December 31, 2024, the Company issued 744,878 shares of Series D-1 Preferred Stock in satisfaction of accrued directors’ fees in the amount of $2,131,839.

During the year ended December 31, 2024, the Company issued 1,141,262 shares of Series D-1 Preferred Stock in exchange of 11,416,262 shares of Series D Preferred Stock.

During the year ended December 31, 2024, principal and interest in the aggregate amount of $2,674,224, converted into 934,398 shares of Series D-1 Preferred Stock.

During the year ended December 31, 2023, principal and interest in the aggregate amount of $1,758,563, converted into 614,471 shares of Series D-1 Preferred Stock.

Common Stock Issuances

During the year ended December 31, 2024, the Company issued 757,760 shares of common stock upon the conversion of 75,776 shares of Series D-1 Preferred Stock.

During the year ended December 31, 2023, the Company issued an aggregate of 25,000 shares of immediately vested restricted common stock with a grant date fair value of $2,850 for services.

11. Stock Incentive Plan and Warrants

The 2017 Amendment and Restatement of the Provectus Biopharmaceuticals, Inc. 2014 Equity Compensation Plan (the “2017 Equity Compensation Plan”) provides for the issuance of up to 20,000,000 shares of common stock pursuant to stock options for the benefit of eligible employees and directors of the Company. Options granted under the 2017 Equity Compensation Plan are either “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code or options which are not incentive stock options. Vested stock options are exercisable over a period determined by the Board of Directors (through its Compensation Committee), but generally no longer than 10 years after the date they are granted. The 2017 Equity Compensation Plan, as amended, expired on April 25, 2023.

2024 Equity Compensation Plan

At the shareholder meeting held on June 20, 2024, the proposal for the new 2024 Equity Compensation Plan was approved. The approval gives the Company the authority to grant Options and award Restricted Stock under the 2024 Equity Compensation Plan for up to 100,000,000 shares of our common stock. As of December 31, 2024, there were 49,681,898 shares available for issuance under the 2024 Equity Compensation Plan.

The following table summarizes option activity during the years ended December 31, 2024 and 2023:

Stock Options

On December 2, 2024, the Company granted five and ten-year options for the purchase of 50,318,102 shares of the Company’s common stock exercisable at $0.2862 per share, as follows:

The grant date value of the stock options was calculated using the Black Sholes valuation model with the following assumptions:

Option forfeitures are accounted for at the time of occurrence. The expected term used is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of employee option grants. The Company utilizes an expected volatility figure based on the historical volatility of its common stock over a period of time equivalent to the expected term of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

During the year ended December 31, 2024, the Company recognized stock-based compensation expense of $1,280,786. As of December 31, 2024, there was $2,337,412 of unrecognized stock-based compensation related to the above stock options, which will be recognized over the weighted average remaining vesting period of 1.9 years.

As of December 31, 2024, the intrinsic value of outstanding and exercisable options was $0.

The following table summarizes information about stock options outstanding at December 31, 2024:

Warrants

There were no warrants granted during the years ended December 31, 2024 and 2023.

The following table summarizes warrant activity during the years ended December 31, 2024 and 2023:

Holders of the outstanding warrants are not entitled to vote and the exercise prices of such warrants are subject to customary anti-dilution provisions.

***12. Income Taxes ***

The domestic and foreign components of loss before income taxes from operations for the years ended December 31, 2024 and 2023 are as follows:

The income tax provision (benefit) consists of the following:

The reconciliations between the statutory federal income tax rate and the Company’s effective tax rate are as follows:

The components of the Company’s deferred income taxes are summarized below:

A valuation allowance against deferred tax assets is required if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets may not be realized. The Company is in the early stages of development and realization of the deferred tax assets is not considered more likely than not. As a result, the Company has recorded a full valuation allowance for the net deferred tax asset. A portion of the valuation allowance relates to Research and Development credit carryovers. There has been no formal Research and Development studies performed related to the amounts calculated for these credits. While management believes the amounts taken as credits are accurate, it is possible a future adjustment would be necessary to reduce the value of the of these credit carryovers.

Since inception of the Company on January 17, 2002, the Company has generated federal, state, and Australian tax net operating losses of approximately $163 million, $140 million, and $105 thousand, respectively. Under the Tax Cuts and Jobs Act, federal net operating losses incurred after December 31, 2017 may be carried forward indefinitely. The tax loss carryforwards of the Company may be subject to limitation by Section 382 of the Internal Revenue Code with respect to the amount utilizable each year. This limitation could reduce the Company’s ability to utilize net operating loss carryforwards. Federal net operating losses (“NOLs”) totaling $140.5 million expire in various amounts between 2025 and 2037. Federal NOLS totaling $22.5 million do not expire.

State NOLS totaling $140.2 million expire in various years between 2025 and 2040.

Australia NOLS totaling $105,104 do not expire.

The Company has determined that there are no uncertain tax positions as of December 31, 2024 or 2023.

We file income tax returns in the U.S., Tennessee, and Australia. As of December 31, 2024, the U.S. federal and Tennessee tax years open to examination are 2021 through 2024. The Australia income tax return remains open to examination for 2022 through 2024.

To date, the Company’s operations conducted by its Australian subsidiary consist primarily of research and development activities. As of December 31, 2024, there were no accumulated earnings and profits in the Company’s foreign subsidiary. At current tax rates, no additional federal income taxes (net of available tax attributes) would be payable if such earnings were to be repatriated.

13. Leases

Leases

On June 18, 2022, the Company moved into 2,700 square feet of leased corporate office space in Knoxville, Tennessee through an operating lease agreement for a term ofthree years ending June 30, 2025. The monthly base rent ranges from $4,053 to $4,278 over the term on the lease.

Total expense for operating leases for the year ended December 31, 2024 was $51,446, of which $34,297 was included within research and development and $17,149 was included within general and administrative expenses on the consolidated statements of operations. Total expense for operating leases for the year ended December 31, 2023 was $51,393, of which, $34,262 was included within research and development and $17,131 was included within general and administrative expenses on the consolidated statements of operations.

As of December 31, 2024, the Company had no leases that were classified as a financing lease. As of December 31, 2024, 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:

Future minimum payments under the non-cancellable lease as of December 31, 2024 were as follows:

14.401(K) Profit Sharing Plan

The Company maintains a retirement plan under Section 401(k) of the Internal Revenue Code, which covers all eligible employees. All employees with U.S. source income are eligible to participate in the plan immediately upon employment. There wasno contribution made by the Company in 2024 or 2023.

15. Grants

On October 25, 2021, the Company received a grant award of $2,500,000 from the State of Tennessee for the study of animal cancers and dermatological disorders for the period October 15, 2021 to June 30, 2022 (the “Tennessee Grant” or “Grant”). The Tennessee Grant was pre-funded; therefore, the funds do not need to be used in full by June 30, 2022. The Tennessee Grant was provided as reimbursement of research and development expenses related to the development of animal health drug products. The Company has elected gross presentation of the Tennessee Grant income earned and the related research and development expenses, with Tennessee Grant income presented as grant revenue in the period in which it is earned, and qualifying costs presented as research and development expenses included in the Company’s statement of operations in the period that such costs are incurred. As of December 31, 2024 and 2023, the Company recorded $336,108 and $953,248, respectively, as unearned grant revenue liability on the accompanying audited consolidated balance sheets. The Company recorded $617,140 and $557,710 of grant revenue during the years ended December 31, 2024 and 2023, respectively.

16. License Transactions

On March 21, 2024, the Company entered into an exclusive worldwide license agreement (the License Agreement”) with the University of Miami (“UM”) for the license and development of the UM’s intellectual property related to photodynamic antimicrobial therapy in ophthalmology. The License Agreement grants the Company exclusive, worldwide rights to research, develop, make, use, or sell Licensed Products and/or Licensed Processes (as defined in the License Agreement) based upon patent-related rights.

As consideration for the rights granted in the License Agreement, the Company must pay an upfront fee of $10,000, royalties equal to 10% of net sales of Licensed Products and/or Licensed Processes, and annual payments of $1,000 on the first through fourth anniversaries of the License Agreement and $10,000 on every anniversary thereafter. In the event of a sublicense to a third party, the Company is obligated to pay royalties to the University equal to a percentage of sublicense income ranging from 10% to 30% depending on the phase of clinical trials.

Pursuant to the requirements of the License Agreement, the Company created a new subsidiary “VisiRose” for the purpose of developing and commercializing Licensed Products and Licensed Processes, assigned the License Agreement to VisiRose, and entered into an equity agreement with respect to VisiRose’s securities. Pursuant to the equity agreement, VisiRose will be required to issue to the University 5% of the total number of issued and outstanding shares of VisiRose. The University will have certain anti-dilution rights related to additional issuances of VisiRose securities before VisiRose receives a total of $2,000,000 in cash.

On December 5, 2024, the Board approved the formation of a subsidiary of the Company to be incorporated under the laws of the State of Delaware under the name VisiRose and to pursue the development and commercialization of the Company’s pharmaceutical-grade API RBS for the treatments of ophthalmology diseases and disorders. The certificate of incorporation of VisiRose was filed with the secretary of state of Delaware on December 5, 2024.

Provectus holds a majority ownership interest in its subsidiary, VisiRose, with a 93.4% stake, while the University of Miami retains a 5.0% ownership interest, and two additional investors hold approximately 1.6%. In accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company consolidates VisiRose’s financial results within its consolidated financial statements. For the reporting period, the Company recorded a net loss of $29,585 attributable to the noncontrolling interest in VisiRose, reflecting the noncontrolling interests’ proportionate share of the subsidiary’s losses.

The License Agreement sets forth certain diligence milestones that include forming VisiRose, creating a Licensed Product suitable for submission to the Food and Drug Administration (“FDA”), generating Licensed Product data suitable for required submission to the FDA, submitting a drug-device combination application to the FDA, and receiving clearance, approval or other authorization from the FDA for the Licensed Product portion of the drug-device combination. The License Agreement also provides for development milestone payments of $5,000 upon the first commercial sale of approved Licensed Product and $50,000 upon net sales of Licensed Product of at least $500,000.

Pursuant to the License Agreement, the Board approved the transfer of certain assets to VisiRose, such as the License Agreement, and the Company’s exclusive master supply agreement for API and investigational drug product, subject to final review and contract finalization by the Board. The Company and VisiRose entered into an agreement on December 20, 2024 whereby the Company assigned the License Agreement to VisiRose, which the University approved.

The term of the License Agreement is the later of (i) the expiration or abandonment of all issued patents and patent applications related to patent rights under the License Agreement and/or no royalties are due, (ii) any regulatory exclusivity has expired, and (iii) 20 years from the first commercial sale of Licensed Product and/or Licensed Process. The License Agreement provides that the Company may terminate the License Agreement upon 90 days’ written notice to the University, and each party has the right to terminate the License Agreement if the other party commits a material breach of the terms of the License Agreement and such breach remains uncured for thirty days after receipt of written notice.

17. Commitments, Contingencies and Litigation

The Company may, from time to time, be involved in litigation arising in the ordinary course of business which may be expected to be covered by insurance. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

18. Subsequent Events

The Company has evaluated events that have occurred after the balance sheet date and through the date the financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed below.

2025 Financing Note

On January 15, 2025, the Board approved a Financing Term Sheet (the “2025 Term Sheet”), which set forth the terms under which the Company will use its best efforts to arrange for financing of a maximum of $5,000,000 (the “2025 Financing”), which amounts will be obtained in several tranches.

Pursuant to the 2025 Term Sheet, the 2025 Notes (defined below) will convert into shares of the Company’s Series D-1 Preferred Stock twelve months after the issue date of a 2025 Note.

The 2025 Financing will be in the form of unsecured convertible loans from the investors (the “2025 Note Investors”) and evidenced by convertible promissory notes (individually, a “2025 Note” and collectively, the “2025 Notes”). In addition to customary provisions, the 2025 Notes will contain the following provisions:

Convertible Notes Payable

Subsequent to December 31, 2024, the Company entered into 2025 Notes with a related party investor (a director of the Company) in the aggregate principal amount of $455,000.

Preferred Stock

Subsequent to December 31, 2024, principal and interest in the aggregate amount of $1,046,695 representing 2022 Notes were converted into 365,400 shares of Series D-1 Convertible Preferred Stock upon automatic conversion of the 2022 Notes.

VisiRose

Subsequent to December 31, 2024, the Company’s majority-owned subsidiary, VisiRose, received investments totaling $700,000 in exchange for the issuance of 3,694 shares of VisiRose common stock. In accordance with the licensing agreement, VisiRose also issued an additional 188 shares of common stock to the University of Miami to maintain the University’s 5% ownership interest.