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 ~~September 30, 2019~~March 31, 2020

[ ]	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: ~~None~~

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:~~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 ~~November 12, 2019,~~May 11, 2020, was ~~388,576,975.~~390,689,475.

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	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4. Controls and Procedures	19

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	20
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3. Defaults Upon Senior Securities	21
Item 4. Mine Safety Disclosures	21
Item 5. Other Information	21
Item 6. Exhibits	21

SIGNATURES	22

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, ~~2018)~~2019), ~~and the following:~~and:

	●	Our potential receipt of sales from investigational drug products PV-10^® and PH-10^®, and/or any other halogenated xanthene-based drug products (if and when approved); ~~transaction fees;~~and licensing, milestone, royalty and/or ~~royalty payments;~~other payments related to these investigational drug products and/or ~~payments in connection with~~ the Company’s liquidation, dissolution or winding up, or any sale, lease, conveyance or other disposition of any intellectual property relating to ~~our~~halogenated xanthene-based investigational drug products and/or drug ~~substance rose bengal (and/or any other halogenated xanthene),~~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

	●	~~Our ability to close on additional tranches~~ The widespread outbreak of ~~the financing from~~an illness or communicable/infectious disease, such assevere acute respiratory syndrome coronavirus 2, or a group of the Company’s stockholders (the “PRH Group”) pursuant to the Definitive Financing Commitment Term Sheet we entered into with the PRH Group (which has specifically disclaimed it is a “group” as defined under U.S. federal securities law) effective as of March 19, 2017.public health crisis, could disrupt our business and adversely affect our operations and financial condition.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PROVECTUS BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			March 31,			December 31,
	2019			2018			2020			2019
	(Unaudited)						(unaudited)
Assets

Current Assets:
Cash and cash equivalents	$	434,787		$	50,986		$	213,739		$	590,706
Short-term receivables - legal fees, settlement and other, net		290,076			595,326			74,235			55,058
Prepaid expenses		169,113			370,209			240,361			350,249

Total Current Assets		893,976			1,016,521			528,335			996,013

Equipment and furnishings, less accumulated depreciation of $61,107 and $50,538, respectively		61,907			72,476
Equipment and furnishings, less accumulated depreciation of $68,153 and $64,630, respectively								54,861			58,384
Operating lease right-of-use asset		212,187			-			176,439			194,400
Patents, net of accumulated amortization of $11,319,558 and $10,816,218, respectively		395,887			899,227
Patents, net of accumulated amortization of $11,655,118 and $11,487,338, respectively								60,327			228,107

Total Assets	$	1,563,957		$	1,988,224		$	819,962		$	1,476,904

Liabilities and Stockholders’ Deficiency

Current Liabilities:
Accounts payable - trade	$	1,345,677		$	3,312,049		$	1,581,762		$	1,125,890
Accrued interest								75,333			65,333
Convertible notes payable								1,000,000			500,000
Other accrued expenses		949,427			790,358			1,250,227			1,255,266
Current portion of operating lease liability		76,423			-			79,533			76,423

Total Current Liabilities		2,371,527			4,102,407			3,986,855			3,022,912

Accrued interest		1,314,357			659,379			1,763,304			1,501,864
Accrued interest - related parties		1,125,549			711,927			1,360,293			1,226,582
Convertible notes payable		12,297,000			7,062,000			12,697,000			12,997,000
Convertible notes payable - related parties		6,895,000			6,870,000			6,770,000			6,670,000
Non-current portion of operating lease liability		148,644			-			108,070			130,658

Total Liabilities		24,152,077			19,405,713			26,685,522			25,549,016

Commitments and contingencies (Note 8)
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 September 30, 2019 and December 31, 2018; aggregate liquidation preference of $3,500 at September 30, 2019 and December 31, 2018		-			-
Common stock; par value $0.001 per share; 1,000,000,000 shares authorized; 388,576,975 and 384,614,528 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		388,577			384,615
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 March 31, 2020 and December 31, 2019; aggregate liquidation preference of $3,500 at March 31, 2020 and December 31, 2019								-			-
Common stock; par value $0.001 per share; 1,000,000,000 shares authorized; 390,689,475 and 389,889,475 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively								390,689			389,889
Additional paid-in capital		209,309,619			209,092,187			209,420,675			209,378,835
Accumulated other comprehensive loss		(24,801	)		-			(33,035	)		(24,008	)
Accumulated deficit		(232,261,515	)		(226,894,291	)		(235,643,889	)		(233,816,828	)

Total Stockholders’ Deficiency		(22,588,120	)		(17,417,489	)		(25,865,560	)		(24,072,112	)

Total Liabilities and Stockholders’ Deficiency	$	1,563,957		$	1,988,224		$	819,962		$	1,476,904

See accompanying notes to condensed consolidated financial statements.

PROVECTUS BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended
	September 30,						September 30,						March 31,
	2019			2018			2019			2018			2020			2019

Operating Expenses:
Research and development	$	1,004,454		$	528,355		$	3,250,109		$	3,458,657		$	909,446		$	1,037,331
General and administrative		438,359			829,406			1,828,675			2,693,293			538,794			759,253
Total Operating Expenses		1,442,813			1,357,761			5,078,784			6,151,950			1,448,240			1,796,584

Total Operating Loss		(1,442,813	)		(1,357,761	)		(5,078,784	)		(6,151,950	)		(1,448,240	)		(1,796,584	)
Other Income/(Expense):
Gain on settlement of lawsuits		-			-			675,000			825,000			-			675,000
Research and development tax credit		(826	)		-			82,115			42,685			26,251			84,072
Investment and interest income		1,140			4,931			23,045			16,656			79			2,255
Interest expense		(377,576	)		(256,173	)		(1,068,600	)		(697,214	)		(405,151	)		(334,573	)
Total Other Income/(Expense)														(378,821	)		426,754

Net Loss	$	(1,820,075	)	$	(1,609,003	)	$	(5,367,224	)	$	(5,964,823	)	$	(1,827,061	)	$	(1,369,830	)

Basic and Diluted Loss Per Common Share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.02	)	$	(0.00	)	$	(0.00	)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted		385,817,485			383,256,742			385,726,721			380,754,529			390,557,607			384,705,639

See accompanying notes to condensed consolidated financial statements.

PROVECTUS BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended
	September 30,						September 30,						March 31,
	2019			2018			2019			2018			2020			2019

Net Loss	$	(1,820,075	)	$	(1,609,003	)	$	(5,367,224	)	$	(5,964,823	)	$	(1,827,061	)	$	(1,369,830	)
Other Comprehensive Loss:
Foreign currency translation adjustments		58			-			(24,801	)		-			(9,027	)		(22,363	)
Total Comprehensive Loss	$	(1,820,017	)	$	(1,609,003	)	$	(5,392,025	)	$	(5,964,823	)	$	(1,836,088	)	$	(1,392,193	)

See accompanying notes to condensed consolidated financial statements.

PROVECTUS BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY

(Unaudited)

	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019																			FOR THE THREE MONTHS ENDED MARCH 31, 2020
											Accumulated									Preferred										Accumulated
	Preferred Stock								Additional		Other									Stock								Additional		Other
	Series B				Common Stock				Paid-In		Comprehensive			Accumulated						Series B				Common Stock				Paid-In		Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Total			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	)
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		-		-		100,000		100		5,230		-			-			5,330			-		-		800,000		800		41,840		-			-			42,640
Comprehensive loss:								-																			-
Net loss		-		-		-		-		-		-			(1,369,830	)		(1,369,830	)		-		-		-		-		-		-			(1,827,061	)		(1,827,061	)
Other comprehensive loss		-		-		-		-		-		(22,363	)		-			(22,363	)		-		-		-		-		-		(9,027	)		-			(9,027	)

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	)

Common stock issued for services		-		-		25,000		25		1,725		-			-			1,750
Common stock issued upon exercise of warrants		-		-		3,645,857		3,646		190,678		-			-			194,324
Warrants issued for services		-		-		-		-		915		-			-			915
Comprehensive loss:
Net loss		-		-		-		-		-		-			(1,820,075	)		(1,820,075	)
Other comprehensive loss		-		-		-		-		-		58			-			58

Balance at September 30, 2019		100	$	-		388,576,975	$	388,577	$	209,309,619	$	(24,801	)	$	(232,261,515	)	$	(22,588,120	)
Balance at March 31, 2020																					100	$	-		390,689,475	$	390,689	$	209,420,675	$	(33,035	)	$	(235,643,889	)	$	(25,865,560	)

	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018																FOR THE THREE MONTHS ENDED MARCH 31, 2019
	Preferred Stock								Additional								Preferred										Accumulated
	Series B				Common Stock				Paid-In		Accumulated						Stock								Additional		Other
	Shares		Amount		Shares		Amount		Capital		Deficit			Total			Series B				Common Stock				Paid-In		Comprehensive			Accumulated
																	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Total
Balance at January 1, 2018		100	$	-		370,961,451	$	370,962	$	208,351,431	$	(218,741,236	)	$	(10,018,843	)

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		-		-		7,926,739		7,927		414,568		-			422,495			-		-		100,000		100		5,230		-			-			5,330
Comprehensive loss:																								-
Net loss		-		-		-		-		-		(2,899,612	)		(2,899,612	)		-		-		-		-		-		-			(1,369,830	)		(1,369,830	)
Other comprehensive loss																		-		-		-		-		-		(22,363	)		-			(22,363	)

Balance at March 31, 2018		100	$	-		378,888,190	$	378,889	$	208,765,999	$	(221,640,848	)	$	(12,495,960	)

Common stock issued upon exercise of warrants		-		-		3,222,838		3,223		168,555		-			171,778
Common stock issued in lieu of accounts payable		-		-		1,000,000		1,000		79,000		-			80,000
Net loss		-		-		-		-		-		(1,456,208	)		(1,456,208	)

Balance at June 30, 2018		100	$	-		383,111,028	$	383,112	$	209,013,554	$	(223,097,056	)	$	(13,700,390	)

Common stock issued upon exercise of warrants		-		-		390,000		390		20,396		-			20,786
Common stock issued in lieu of accounts payable		-		-		-		-		-		-			-
Net loss		-		-		-		-		-		(1,609,003	)		(1,609,003	)

Balance at September 30, 2018		100	$	-		383,501,028	$	383,502	$	209,033,950	$	(224,706,059	)	$	(15,288,607	)
Balance at March 31, 2019																		100	$	-		384,714,528	$	384,715	$	209,097,417	$	(22,363	)	$	(228,264,121	)	$	(18,804,352	)

See accompanying notes to condensed consolidated financial statements.

PROVECTUS BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended						For the Three Months Ended
	September 30,						March 31,
	2019			2018			2020			2019

Cash Flows From Operating Activities:
Net loss	$	(5,367,224	)	$	(5,964,823	)	$	(1,827,061	)	$	(1,369,830	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		21,740			80,000			-			2,650
Noncash lease expense								17,961			-
Depreciation		63,492			10,570			3,523			21,311
Amortization of patents		503,340			503,340			167,780			167,780
Changes in operating assets and liabilities
Settlement receivable		52,500			434,040
Short term receivables								(27,728	)		(33,943	)
Prepaid expenses		201,096			192,643			109,888			98,225
Accounts payable - trade		(1,966,372	)		(810,036	)		456,437			(1,857,444	)
Other accrued expenses and lease liability		371,776			462,409
Other accrued expenses								(2,795	)		570,624
Operating lease liability								(19,478	)		-
Accrued interest expense		1,068,600			697,214			405,151			334,574

Net Cash Used In Operating Activities		(5,051,052	)		(4,394,643	)		(716,322	)		(2,066,053	)

Cash Flows From Financing Activities:
Proceeds from issuance of convertible notes payable		5,235,000			2,556,000			200,000			3,775,000
Proceeds from issuance of convertible notes payable - related parties		25,000			1,350,000			100,000			25,000
Proceeds from exercise of warrants		199,654			615,059			42,640			5,330
Net Cash Provided By Financing Activities		5,459,654			4,521,059			342,640			3,805,330

Effect of Exchange Rate Changes on Cash		(24,801	)		-			(3,285	)		(22,363	)

Net Increase In Cash and Cash Equivalents		383,801			126,416
Net (Decrease) Increase In Cash and Cash Equivalents								(376,967	)		1,716,914

Cash and Cash Equivalents, Beginning of Period		50,986			105,504			590,706			50,986

Cash and Cash Equivalents, End of Period	$	434,787		$	231,920		$	213,739		$	1,767,900

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	-		$	-
Taxes	$	-		$	-

Non-cash investing and financing activities:
Offset of related party receivable and payable	$	252,750		$	-		$	-		$	25,000

See accompanying notes to condensed consolidated financial statements.

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 a new class of drugs for oncology, hematology, and dermatology based on an entire, wholly-owned, family of small molecules called halogenated xanthenes:

	●	Oncology:Intralesional (aka intratumoral) PV-10, a cancer immunotherapy, is undergoing clinical study for adult solid tumor cancers, like melanoma and gastrointestinal (“GI”) tumors (including hepatocellular carcinoma, metastatic colorectal cancer, metastatic neuroendocrine tumors, and metastatic uveal melanoma, among others). Orphan drug designation status has been granted to PV-10 by the U.S. Food and Drug Administration (the “FDA”) for the treatments of metastatic melanoma in 2006, hepatocellular carcinoma in 2011, and ocular melanoma (including uveal melanoma) in 2019.

		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 PV-10 by the FDA for neuroblastoma in 2018.

	●	Hematology.PV-10 is also undergoing preclinical study for pediatric blood cancers (including leukemia).

	●	Dermatology:Topical PH-10, an immuno-dermatology agent, is undergoing clinical study for inflammatory dermatoses, like psoriasis and atopic dermatitis.

To date, the Company has not generated any revenues 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, ~~2018~~2019 filed with the SEC on March ~~7, 2019.~~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 three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019.~~2020.

A novel strain of coronavirus (“CoV”),severe acute respiratory syndrome (“SARS”) CoV 2 (“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 outbreak, 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 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 March 31, 2020.

The full extent of SARS-CoV-2 future impacts on the Company’s operations and financial condition is uncertain. A prolonged SARS-CoV-2 outbreak 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.

2. Liquidity and Going Concern

The Company’s cash and cash equivalents were ~~$434,787~~$213,739 at ~~September 30, 2019.~~March 31, 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 PV-10, ~~and~~ PH-10, and/or any other halogenated xanthene-based drug products, and to raise additional capital.

The Company plans to access capital resources through possible public or private equity offerings, including the ~~2017~~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, 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 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 ~~2017~~2020 Financing or otherwise, it will not be able to pay its obligations as they become due.

Subsequent to March 31, 2020, the Company received an aggregate $50,000 in connection with the 2020 Financing. In April 2020, the Company received $62,500 from the Paycheck Protection Program (“PPP”) and $3,000 from an Economic Injury Disaster Loan (“EIDL”) grant (“EIDG”) of the Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”). See Note 10 – Subsequent Events.

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 PV-10, PH-10, and/or any other halogenated xanthene-based drug ~~product candidate~~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 ~~2019~~2020 and beyond. The Company anticipates that these funds will otherwise come from the proceeds of private placement transactions, including the ~~2017~~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.

3. Critical Accounting Policies

Since the date the Company’s December 31, ~~2018~~2019 consolidated financial statements were issued in its ~~2018~~2019 Annual Report, there have been no material changes to the Company’s significant accounting policies, except as disclosed below.

~~Leases~~Recently Issued Accounting Standards

In ~~February 2016,~~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 ~~new standard~~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 ~~leases~~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 ~~increase transparency and comparability among organizations by requiring~~ the recognition of operating lease right-of-use (“ROU”) assets and lease liabilities on the balance sheet (“ASC 842”) with amendments issued in 2018. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company is also required to recognize and measure new leases at the adoption date and recognize a cumulative-effect adjustment in the perioddates of adoption ~~using a modified retrospective approach, with certain practical expedients available.~~

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 ~~ASC 842~~certain provisions which have become effective ~~January 1, 2019~~during fiscal 2020 within ASU 2020-03 and ~~elected to apply the available practical expedients. The standard had an impact on the Company’s condensed consolidated balance sheets but~~its adoption did not have a material impact on the Company’s condensed consolidated financial statements ~~of operations or~~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 ~~cash flows~~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 ~~adoption. The most significant impact was~~enactment. Accordingly, the ~~recognition of ROU assets and lease liabilities for operating leases, while~~CARES Act is effective beginning in the ~~Company’s accounting for finance leases remained substantially unchanged.~~quarter ended March 31, 2020. The adoption of ~~ASC 842~~the CARES Act provisions did not have a material impact ~~in the current year and prior year comparative periods and as a result, a cumulative-effect adjustment was not required.~~

~~Reclassifications~~

Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share.

~~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 warrants and 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.~~condensed consolidated financial statements.

4. Convertible Notes Payable

2020 Financing

On ~~March 23, 2017,~~December 31, 2019, the ~~Company entered into an exclusive~~Board approved a Definitive Financing ~~Commitment~~ Term Sheet ~~with a group of the Company’s stockholders~~ (the ~~“PRH Group”~~“2020 Term Sheet”), which ~~was amended and restated effective as of March 19, 2017 (the “Term Sheet”) that set~~sets forth the terms onunder which the ~~PRH Group would~~Company will use ~~their~~its best efforts to arrange for a financing of a ~~minimum of $10,000,000 and~~ maximum of $20,000,000 (the ~~“2017~~“2020 Financing”). 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.

~~As of September 30, 2019,~~Since financing was launched and through March 31, 2020, the Company had received aggregate ~~loans~~Loans of ~~$19,192,000~~$400,000 in connection with the ~~2017~~2020 Financing.

The Series D Preferred Stock

As of ~~September 30, 2019,~~March 31, 2020, and through the date of filing, the Series D Preferred Stock had not been designated by the ~~Company’s Board~~Board. Per the terms of ~~Directors (the “Board”).~~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 ~~loan~~notes for a potential beneficial conversion feature as the definition of a firm commitment has not been met since the ~~PRH Notes~~notes were not convertible as of their respective dates of issuance or as of ~~September 30, 2019.~~March 31, 2020.

Convertible Notes Payable – Related Parties

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company entered into additional related party ~~PRH~~2020 Notes in the aggregate principal amount of ~~$25,000.~~$100,000.

~~As of September 30, 2019, the Company had borrowed $6,895,000 of related party PRH Notes that were outstanding.~~

Convertible Notes Payable – Non-Related Parties

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company entered into additional non-related party ~~PRH~~2020 Notes in the aggregate principal amount of ~~$5,235,000.~~

$200,000. As of ~~September 30, 2019,~~March 31, 2020, the Company had borrowed ~~$12,297,000~~$300,000 under these notes.

5. Related Party Transactions

During the three months ended March 31, 2020 and 2019, the Company paid Mr. Bruce Horowitz (Capital Strategists) consulting fees of ~~non-related~~$52,400 and $110,000, respectively, for services rendered. Accrued director fees for Mr. Horowitz as of March 31, 2020 and 2019 were $18,750 and $18,750, respectively. Mr. Horowitz serves as both COO and a Director.

See Note 4 and Note 6 for details of other related party ~~PRH Notes that were outstanding.~~transactions.

5.6. Receivables

The following table summarizes the receivables at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

	September 30, 2019									March 31, 2020
	Legal Fees			Settlement			Total			Tax Credit		Legal Fees			Settlement			Total

Provectus Australia Tax Credit										$	74,235	$	-		$	-		$	74,235
Gross receivable	$	683,250		$	1,703,405		$	2,386,655			-		455,500			1,649,043			2,104,543
Reserve for uncollectibility		(455,500	)		(1,649,043	)		(2,104,543	)		-		(455,500	)		(1,649,043	)		(2,104,543	)
Net receivable		227,750			54,362			282,112		$	74,235	$	-		$	-		$	74,235
Short-term receivable - Settlement		-			54,362			54,362
Short-term receivable - Legal		227,750			-			227,750
Long-term receivable	$	-		$	-		$	-

	December 31, 2018									December 31, 2019
	Legal Fees			Settlement			Total			Tax Credit		Legal Fees			Settlement			Total

Provectus Australia Tax Credit										$	55,058	$	-		$	-		$	55,058
Gross receivable	$	911,000		$	1,783,795		$	2,694,795			-		455,500			1,649,043			2,104,543
Reserve for uncollectibility		(455,500	)		(1,649,043	)		(2,104,543	)		-		(455,500	)		(1,649,043	)		(2,104,543	)
Net receivable		455,500			134,752			590,252		$	55,058	$	-		$	-		$	55,058
Short-term receivable - Settlement		-			134,752			134,752
Short-term receivable - Legal		455,500			-			455,500
Long-term receivable	$	-		$	-		$	-

During the nine months ended September 30, 2019, officers of the Company offset their settlement amounts owed to the Company against accrued payroll and other payables totaling $252,750. This offset reduced the amount of the settlement and was approved by the Company’s Board.

6.7. Stockholders’ Deficiency

Common Stock

During the ~~nine~~three months ended September 30, 2019, the Company issued an aggregate of 216,590 shares of immediately vested restricted common stock to an employee and consultants with an issuance date fair value of $10,712, which was recognized immediately.

~~Warrants~~

During the nine months ended September 30, 2019, the Company issued 387,500 five-year immediately vested warrants to a consultant to purchase an aggregate of 387,500 shares of common stock with exercise prices ranging from $1.00 to $2.00 per share. The warrants had an aggregate grant date fair value of $10,113, which was recognized immediately under stock compensation in general and administrative.

During the nine months ended September 30, 2019, the Company issued 25,000 three-year immediately vested warrants to a consultant to purchase an aggregate of 25,000 shares of common stock with an exercise price of $0.2862 per share. The warrants had an aggregate grant date fair value of $915, which was recognized immediately under stock compensation in general and administrative.

~~In applying the Black-Scholes option pricing model to warrants issued, the Company used the following assumptions:~~

For the Three Month Ended For the Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Expected terms (years) 3.00 n/a 3.00-5.00 n/a
Expected volatility 131 % n/a 129-131 % n/a
Risk free interest rate 1.82 % n/a 1.82-2.23 % n/a
Expected dividends 0.00 % n/a 0.00 % n/a
~~During the nine months ended September 30, 2019,~~March 31, 2020, warrant holders exercised warrants to purchase an aggregate of ~~3,745,857~~800,000 shares of common stock at a price of $0.0533 per share. In connection with these exercises, the Company received aggregate cash proceeds of ~~$199,654 and issued 3,745,857 shares of common stock to the warrant holders.~~$42,640.

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7.8. 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 ~~rent~~operating lease expense for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$79,756,~~$21,302, of which, ~~$53,171~~$14,201 was included within research and development and ~~$26,585~~$7,101 was included within general and administrative expenses on the condensed consolidated statement of operations. Total ~~rent~~operating lease expense for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~$66,313,~~$34,806, of which, ~~$44,209~~$23,204 was included within research and development and $22,104 was included within general and administrative expenses on the condensed consolidated statement of operations. Total rent expense during the three months ended September 30, 2019 was $22,622, of which, $15,081 was included within research and development and $7,541 was included within general and administrative expenses on the condensed consolidated statement of operations. Total rent expense during the three months ended September 30, 2018 was $22,080, of which, $14,720 was included within research and development and $7,360$11,602 was included within general and administrative expenses on the condensed consolidated statement of operations.

As of ~~September 30, 2019,~~March 31, 2020, the Company had no leases that were classified as a financing lease. As of ~~September 30, 2019,~~March 31, 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:

Nine Months End September 30, 2019 Three Months Ended
March 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 66,952
Operating cash flows used in operating leases $ 22,441

Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 265,550 $ -

Weighted Average Remaining Lease Term
Operating leases 2.75 Years 2.25 Years

Weighted Average Discount Rate
Operating leases 8.0 % 8.0 %

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Future minimum payments under the Company’s non-cancellable lease obligations as of ~~September 30, 2019~~March 31, 2020 were as follows:

For the Years Ending December 31, Amount
Years Amount

2019 $ 24,687
2020 90,666 68,225
2021 92,471 92,471
2022 46,687 46,688
Total future minimum lease payments 254,511 207,384
Less: amount representing imputed interest (29,444 ) (19,781 )
Total $ 225,067 $ 187,603

8.9. 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 Audit Committee retained independent counsel and an advisory firm with forensic accounting expertise to assist the Audit Committee in conducting the investigation. The Audit Committee found that Culpepper received $294,255 in expense reimbursements that were unsubstantiated or otherwise improper. The Company seeks to recover from Culpepper the entire $294,255 in expense reimbursements, as well as all attorney’s fees and auditors’/experts’ fees incurred by the Company in connection with the examination of his expense reimbursements. On December 12, 2017, Culpepper agreed to an order by the SEC to pay disgorgement of $140,115, and prejudgment interest of $12,261, for a total of $152,376, to the Company within 30 days. The Company received the payment of $152,376 in January 2018.

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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~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. Pursuant to the alternative dispute resolution provisions of that agreement, the Company and Culpepper participated in a mediation of their dispute on June 28, 2017. Having reached no resolution during the mediation, the parties participated in arbitration under the commercial rules of the American Arbitration Association, arbitrating both Culpepper’s claim for severance against the Company and the Company’s claims against Culpepper for improper expense reimbursements and amounts Culpepper owes the Company under the Derivative Lawsuit Settlement (the “Culpepper Arbitration”). ~~The Culpepper Arbitration hearing was held from May 15 to May 18, 2018.~~

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On July 12, 2018, the arbitrator issued an interim award in favor of the Company, the terms of which are confidential pursuant to the Culpepper Employment Agreement and instructed the parties that a final award was forthcoming. 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 November 7, 2018, the Company received Culpepper’s answer to the petition filed on October 4, 2018.~~ This court entered an order confirming the arbitrator’s award on January 23, 2019.
On February 20, 2019, Culpepper filed a motion to alter or amend this 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 ~~judgment confirming the arbitration award and the order denying Culpepper’s motion to alter or amend the judgment (the “Culpepper Appeal”).~~Chancery Court’s judgment. The Company and Culpepper ~~have~~ 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 judgement and awarded court costs to the Company. The time for Culpepper ~~Appeal briefs.~~to file an application for permission to appeal to the Tennessee Supreme Court runs sixty (60) days from the ruling of the Court of Appeals.

9.10. Subsequent Events

Convertible Notes Payable
Subsequent to ~~September 30, 2019,~~March 31, 2020, the Company entered into ~~PRH~~2020 Notes with non-related parties in the aggregate principal amount of ~~$200,000. The~~$50,000 in connection with 2^nd Loans received by the Company ~~had drawn down~~for the ~~entire $200,000 under these notes.~~same amount.

~~Scott Kleba Settlement Agreement Satisfaction~~PaycheckProtection Program

~~Pursuant to the terms and conditions of the Stipulated Settlement Agreement and Mutual Release made and entered into by and between~~On April 20, 2020, the Company ~~(then-Provectus Pharmaceuticals, Inc.)~~received $62,500 from the CARES Act PPP. The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times their average monthly payroll expenses. The loan principal and ~~Timothy C. Scott, Ph.D. on June 6, 2014,~~accrued interest are forgivable, as long as the borrower uses loan proceeds for eligible purposes during the eight weeks following disbursement, such as payroll, benefits, rent, and ~~consented~~utilities, and maintains its payroll levels. The amount of loan forgiveness is reduced if the borrower terminates employees or reduces salaries during this eight-week period, subject to certain qualifications and approved by Glenn Kleba and Don B. Dale (the “Plaintiffs”), derivatively on behalf of the Company in the Plaintiffs’ shareholder derivative lawsuit (the “Kleba Settlement Agreement”), Dr. Scott completed repayment of his Cash Repayment Obligations (as defined in the Kleba Settlement Agreement) on October 9, 2019. Dr. Scott’s Cash Repayment Obligations equaled (i) the Reduced Repayment Amount (as defined in the Kleba Settlement Agreement) of $1,199,303, including imputed interest, plus (ii) Dr. Scott’s pro rataexclusions. The unforgiven portion of the PPP loan 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 proceeds it received for purposes consistent with PPP criteria. While the Company currently believes its use of PPP loan proceeds should meet the conditions for forgiveness of the loan, we cannot assure you that we will not take actions that may cause the Company to be ineligible for loan forgiveness in whole or in part or that PPP eligibility requirements may not change that would result in making the Company or the Company’s ~~Litigation Costs (as defined in~~use of the ~~Kleba Settlement Agreement) of $227,750, for a total payment~~PPP proceeds ineligible.
Economic Injury Disaster Grant
On April 29, 2020, the Company received $3,000 from the CARES Act EIDL. In response to the Company of $1,427,053. As part of his prepayment completion, the PRH Note in the principal amount of $250,000 and accrued interest of $32,111, that the Company entered into with Dr. Scott and Leigh Anne Scott on February 28, 2018 was cancelled. PursuantSARS-CoV-2 pandemic, businesses could apply for an EIDL advance, which is designed to ~~the terms and conditions of the Stock Pledge Agreement related~~provide economic relief to the Kleba Settlement Agreement, satisfaction of his Cash Repayment Obligations removed the Company’s first-priority security interest in 1,000,000 shares of the Company’s common stock beneficially owned by Dr. Scott, which had served as collateral for the Cash Repayment Obligations owedbusinesses currently experiencing a temporary loss. EIDL advances do not have to ~~the Company.~~be repaid.

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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, ~~2018~~2019 filed with the SEC on March 7, 5, 2020 (“2019 ~~(“2018~~ 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 a new class of drugs for oncology, hematology, and dermatology based on an entire, wholly-owned, family of chemical small molecules called halogenated ~~xanthenes, such as rose bengal (4,5,6,7-tetrachloro-2’,4’,5’,7’-tetraiodofluorescein). Intralesional~~xanthenes. Intratumoral (aka ~~intratumoral)~~intralesional) PV-10^®, the first small molecule ~~oncolytic~~autolytic immunotherapy, which can induce immunogenic cell death, is undergoing clinical study for adult solid tumor cancers, ~~like~~such as melanoma and GI tumors ~~(like~~(e.g., hepatocellular carcinoma, metastatic colorectal cancer, metastatic neuroendocrine tumors, ~~and~~ metastatic uveal ~~melanoma, among others)~~melanoma), and preclinical study for pediatric solid tumor cancers ~~(like~~(e.g., neuroblastoma, Ewing sarcoma, rhabdomyosarcoma, ~~and~~ osteosarcoma) and blood cancers ~~(like~~(e.g., acute myeloid leukemia). Topical PH-10^® is undergoing clinical study for inflammatory dermatoses ~~like~~(e.g., psoriasis, ~~and~~ atopic ~~dermatitis.~~dermatitis).

Our Core Science and Technology

Oncology.PV-10 drug product is an injectable formulation of rose bengal disodium (4,5,6,7-tetrachloro-2’,4’,5’,7’-tetraiodofluorescein disodium salt) (“RB”) drug substance (i.e., active pharmaceutical ingredient). PV-10 ~~drug product~~ is a bright rose red solution containing 10% w/v ~~rose bengal disodium~~RB in 0.9% saline for injection, which is supplied in single-use glass vials containing 5 mL (to deliver) of ~~solution~~solution. PV-10 is administered directly to superficial disease (e.g., cutaneous melanoma) via injection and ~~administered without dilution~~ to ~~solid tumors~~visceral disease (e.g., GI tumors) via ~~intralesional (intratumoral)~~image-guided percutaneous injection. PV-10 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). Physicochemical properties of lysosomes trap PV-10. Lumenal pH of 4.5 to 5 is ideal for the conversion of soluble rose bengal disodium into insoluble rose bengal lactone.

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. ~~Dr. de Duve~~He was awarded the Nobel Prize in 1974 for discovering and characterizing lysosomes.

Provectus showed that PV-10 selectively accumulates in the lysosomes of cancer cells and disrupts them, causing the cancer cells to die. PV-10 ~~(rose bengal)~~(RB) 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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PV-10’s lysosomal targeting comprises:

● Transiting the plasmalemma (i.e., the cell membrane) of cancer cells. PV-10 penetrates the cell membrane of cancerous ~~cells. The plasmalemma previously protected~~cells which normally protects the cancer cell from its surrounding environment. PV-10, however, is excluded from normal ~~cells,~~cells;

● Accumulating in the lysosomes of cancer cells. As noted above, the physicochemical properties of lysosomes trap ~~PV-10,~~PV-10;

● Triggering the release of lysosomal contents. Acute autolysis ~~occurs~~can occur within ~~30 to~~ 60 minutes. Early preclinical work by Provectus on PV-10’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,~~carcinoma;

● Inducing the rapid cell death of cancer cells. Early trypan blue exclusion work by Provectus confirmed cell death within ~~hours,~~hours; and,

● Intracellular pH consistency with the release of acidic lysosomal contents. Early ~~SNARF-1~~seminaphthorhodafluor-1 (“SNARF-1”) staining work by Provectus confirmed lower intracellular pH upon exposure to PV-10 ~~(rose bengal)~~(RB).

Dermatology.For psoriasis, pathways significantly improved 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 PH-10 application and expression of a wide-range of central “psoriasis related” genes including IL-23, IL-17, IL-22, S100A7, IL-19, IL-36, and CXCL1 were effectively ~~normalized –~~normalized; that is, treated lesional skin had values in the same range as baseline non-lesional skin.

Our Drug Development Strategy for Oncology and Hematology

The Company’s strategy is ~~designed~~ to (i) demonstrate the independent action of single-agent ~~activity of~~ PV-10; that is, safety and activity in T cell and non-T cell inflamed tumor types, ~~and~~ 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 immunogenic cell death [“ICD”]; Snyder et al.,Sci Immunol 2019) by PV-10 treatment, (iii) demonstrate the functional T cell response generated by PV-10 treatment, and ~~(iii)~~(iv) contrast and compare PV-10 treatment – safety, activity, and induced immune response – with that of immune checkpoint ~~inhibitor~~inhibition (“CI”) and other drug classes in ~~monotherapy~~single-agent and PV-10-based combination therapy settings.

~~We believe this~~This strategy ~~should~~may quicken the advancement of single-agent 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 PV-10 treatment, such as ~~for~~neuroendocrine tumors (“NET”) metastatic ~~neuroendocrine tumors~~to the liver (“mNET”) (NCT02693067). This strategy may also ~~should~~ permit the Company to develop and advance a cancer combination therapy involving aone or more CI and/or other drug ~~class~~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 PV-10 augments clinical response to existing or emerging SOCs, such as ~~for~~uveal melanoma metastatic ~~uveal melanoma~~to the liver (“mUM”) (i.e., combination therapy with an anti-CTLA-4 agent and an anti-PD-1 ~~agents)~~agent) (NCT00986661).
In hematology, research collaborators continue their preclinical work to develop a potential PV-10-based leukemia vaccine for pediatric patients.

Our Drug Development Strategy for Dermatology

The Company’s strategy is ~~designed~~ to (i) demonstrate 12-week single-agent administration proof-of-concept (“POC”) for 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 PH-10 for the treatment of psoriasis and atopic dermatitis that may potentially utilize SOC comparators, and (d) ~~End-of-Phase~~end-of-Phase 2 meetings with the FDA upon the completion of the abovementioned Phase 2 trials, and (ii) expand POC PH-10 treatment to include dermatology combination therapy. Our goal for this POC work is to achieve Phase 3 trial-ready status for PH-10 in both psoriasis and atopic dermatitis.

~~Our Advisory Boards~~
15

The Company named a second member, Frank Akers, Ph.D., to its Strategic Advisory Board effective as of September 1, 2019. The purpose of the Strategic Advisory Board is for the Company to have formal access to a group of independent people with significant, meaningful, professional experience who provide high quality, objective advice to the Company in areas of strategic importance, including but not limited to business development, corporate development, and business operations (such as clinical operations, drug development, regulatory affairs, and manufacturing of drug substance and drug product). The Company named the first member, Harold Schmitz, Ph.D., to its Scientific Advisory Board effective as of September 1, 2019. The purpose of the Scientific Advisory Board is for the Company to have formal access to a group of independent people with significant, meaningful, professional experience who provide high quality, objective advice to the Company in areas of strategic scientific importance, such as but not limited to the Company’s science and technology, and drug development.

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 ~~recognize all~~expense research and development costs as ~~they are~~ incurred. ~~Clinical trial costs, contractor labor, personnel cost, and other research and development-based costs incurred by third parties are expensed as the contracted work is performed.~~

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 ~~expenses include personnel costs, expenses for outside professional services,~~expense consists primarily of salaries, stock-based compensation expense and other ~~allocated expenses. Personnel~~related costs ~~consists of salaries, benefits,~~for personnel in executive, finance, accounting, business development, legal, information technology and ~~stock-based compensation. Outside~~corporate communication functions. Other costs include facility costs not otherwise included in research and development expense, insurance, and professional ~~services consist of~~fees for legal, patent and accounting ~~and audit services, administrative services, and other consulting fees.~~services.
15
16

Results of Operations

Comparison of the Three Months Ended ~~September 30,~~March 31, 2020 and March 31, 2019 ~~and September 30, 2018~~

Overview
For the Three Months Ended
September 30, Increase/
2019 2018 (Decrease) % Change

Operating Expenses:
Research and development $ 1,004,454 $ 528,355 $ 476,099 90.1 %
General and administrative 438,359 829,406 (391,047 ) -47.1 %
Total Operating Expenses 1,442,813 1,357,761 85,052 6.3 %

Total Operating Loss (1,442,813 ) (1,357,761 ) (85,052 ) 6.3 %
Other Income/(Expense):
Gain on settlement of lawsuits - - - 0.0 %
Research and development tax credit (826 ) - (826 ) 100.0 %
Investment and interest income 1,140 4,931 (3,791 ) -76.9 %
Interest expense (377,576 ) (256,173 ) (121,403 ) 47.4 %

Net Loss $ (1,820,075 ) $ (1,609,003 ) $ (211,072 ) 13.1 %
Total operating expenses were $1,448,240 for the three months ended March 31, 2020, a decrease of $348,344 or 19.4% compared to the three months ended March 31, 2019. The decrease was driven primarily by our continued transformation and process improvement efforts within the Company. Net loss for the three months ended March 31, 2020 was $1,827,061, an increase of $457,231 or 33.4% which was primarily attributable to gains recognized in connection with settlements of lawsuits in 2019.
For the Three Months Ended
March 31, Increase/
2020 2019 (Decrease) % Change

Operating Expenses:
Research and development $ 909,446 $ 1,037,331 $ (127,885 ) -12.3 %
General and administrative 538,794 759,253 (220,459 ) -29.0 %
Total Operating Expenses 1,448,240 1,796,584 (348,344 ) -19.4 %

Total Operating Loss (1,448,240 ) (1,796,584 ) (348,344 ) 19.4 %
Other Income/(Expense):
Gain on settlement of lawsuits - 675,000 (675,000 ) -100.0 %
Research and development tax credit 26,251 84,072 (57,821 ) -68.8 %
Investment and interest income 79 2,255 (2,176 ) -96.5 %
Interest expense (405,151 ) (334,573 ) (70,578 ) 21.1 %
Total Other Income/(Expense) (378,821) 426,754 (805,575) -188.8 %

Net Loss $ (1,827,061 ) $ (1,369,830 ) $ 457,231 -33.4 %

Research and Development Expenses

Research and development expenses were ~~$1,004,454~~$909,446 for the three months ended ~~September 30, 2019, an increase~~March 31, 2020, a decrease of ~~$476,099~~$127,885 or ~~90.1%~~12.3% compared to the three months ended ~~September 30, 2018.~~March 31, 2019. The ~~increase~~decrease was primarily due to (i) ~~the 2018 settlement between the Company~~reduced cost on clinical trials due to closure of MM-31 study, and ~~a former clinical operations vendor whereby the Company received a credit for $596,894 against its overall amounts due, partially offset by~~ (ii) ~~lower insurance costs, and (iii)~~ a decrease in payroll and related taxes due to a lower negotiated employment agreement.

The following table summarizes our research and development expenses incurred during the three months ended ~~September 30, 2019~~March 31, 2020 and ~~September 30, 2018:~~March 31, 2019:

For the Three Months Ended
March 31, Increase/
2020 2019 (Decrease) % Change

Operating Expenses:
Research and development:
Clinical trial and research expenses $ 584,057 $ 627,535 $ (43,478 ) -6.9 %
Depreciation/amortization 169,942 169,942 - 0.0 %
Insurance 73,592 65,963 7,629 11.6 %
Payroll and taxes 66,479 149,475 (82,996 ) -55.5 %
Rent and utilities 15,376 24,416 (9,040 ) -37.0 %
Total research and development $ 909,446 $ 1,037,331 $ (127,885 ) -12.3 %
17
For the Three Months Ended
September 30, Increase/
2019 2018 (Decrease) % Change

Research and development:
Clinical trial and research expenses $ 689,203 $ 134,818 $ 554,385 411.2 %
Depreciation/amortization 169,941 169,942 (1 ) 0.0 %
Insurance 66,762 67,964 (1,202 ) -1.8 %
Payroll and taxes 61,793 139,172 (77,379 ) -55.6 %
Rent and utilities 16,755 16,459 296 1.8 %
Total research and development $ 1,004,454 $ 528,355 $ 476,099 90.1 %

General and Administrative Expenses

General and administrative expenses were ~~$438,359~~$538,794 for the three months ended ~~September 30, 2019,~~March 31, 2020, a decrease of ~~$391,047~~$220,762 or ~~47.1%~~29.1% compared to the three months ended ~~September 30, 2018.~~March 31, 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.

The following table summarizes our general and administrative expenses incurred during the three months ended ~~September 30, 2019~~March 31, 2020 and ~~September 30, 2018:~~March 31, 2019:

For the Three Months Ended For the Three Months Ended
September 30, Increase/ March 31, Increase/
2019 2018 (Decrease) % Change 2020 2019 (Decrease) % Change

Operating Expenses:
General and administrative:
Depreciation $ 1,361 $ 1,361 $ (0 ) 0.0 % $ 1,361 $ 1,361 $ - 0.0 %
Directors fees 96,250 96,250 - 0.0 % 96,250 96,250 - 0.0 %
Insurance 39,052 56,712 (17,660 ) -31.1 % 41,866 48,396 (6,530 ) -13.5 %
Legal and litigation 71,362 325,880 (254,518 ) -78.1 % 88,062 193,641 (105,579 ) -54.5 %
Other general and administrative cost 23,691 36,605 (12,914 ) -35.3 % 17,007 22,895 (5,888 ) -25.7 %
Payroll and taxes 55,162 116,122 (60,960 ) -52.5 % 35,486 123,271 (87,785 ) -71.2 %
Professional fees 143,278 188,000 (44,722 ) -23.8 % 250,011 260,212 (10,201 ) -3.9 %
Rent and utilities 8,203 8,476 (273 ) -3.2 % 7,660 12,439 (4,779 ) -38.4 %
Foreign currency translation 1,091 788 303 38.5 %
Total general and administrative $ 438,359 $ 829,406 $ (391,047 ) -47.1 % $ 538,794 $ 759,253 $ (220,459 ) -29.0 %

16
Other Income/(Expense)

Other income decreased by ~~$4,617~~$734,997 from ~~$4,931~~$761,327 for the three months ended ~~September 30, 2018~~March 31, 2019 to ~~$314~~$26,330 for the three months ended ~~September 30,~~March 31, 2020 which was primarily attributable to gains recognized in connection with settlements of lawsuits in 2019.

Interest expense increased by ~~$121,403~~$70,578 from ~~$256,173~~$334,573 for the three months ended ~~September 30, 2018~~March 31, 2019 to ~~$377,576~~$405,151 for the three months ended ~~September 30, 2019.~~March 31, 2020. The increase was due to the increased number of convertible notes payable ~~relating to the PRH Notes.~~
~~Comparison of Nine Months Ended September 30, 2019 and September 30, 2018~~
~~Overview~~
For the Nine Months Ended
September 30, Increase/
2019 2018 (Decrease) % Change

Operating Expenses:
Research and development $ 3,250,109 $ 3,458,657 $ (208,548 ) -6.0 %
General and administrative 1,828,675 2,693,293 (864,618 ) -32.1 %
Total Operating Expenses 5,078,784 6,151,950 (1,073,166 ) -17.4 %

Total Operating Loss (5,078,784 ) (6,151,950 ) 1,073,166 -17.4 %

Other Income/(Expense):
Gain on settlement of lawsuits 675,000 825,000 (150,000 ) -18.2 %
Research and development tax credit 82,115 42,685 39,430 92.4 %
Investment and interest income 23,045 16,656 6,389 38.4 %
Interest expense (1,068,600 ) (697,214 ) (371,386 ) 53.3 %

Net Loss $ (5,367,224 ) $ (5,964,823 ) $ 597,599 -10.0 %
~~Research and Development~~
Research and development expenses were $3,250,109 for the nine months ended September 30, 2019, a decrease of $208,548 or 6.0% compared to the nine months ended September 30, 2018. The decrease was due to (i) lower clinical operations due to drug manufacturing in 2018, (ii) the 2018 settlement between the Company and a former clinical operations vendor whereby the Company received a credit for $596,894 against its overall amounts due, (iii) lower insurance costs, and (iv) lower payroll and related taxes due to a lower negotiated employment agreement
~~The following table summarizes our research and development expenses incurred during the nine months ended September 30, 2019 and 2018:~~
For the Nine Months Ended
September 30, Increase/
2019 2018 (Decrease) % Change

Operating Expenses:
Research and development:
Clinical trial and research expenses $ 2,227,329 $ 2,256,074 $ (28,745 ) -1.3 %
Depreciation/amortization 509,825 509,825 - 0.0 %
Insurance 193,774 218,917 (25,143 ) -11.5 %
Payroll and taxes 262,200 423,766 (161,566 ) -38.1 %
Rent and utilities 56,981 50,075 6,906 13.8 %
Total research and development $ 3,250,109 $ 3,458,657 $ (208,548 ) -6.0 %
17
~~General and Administrative~~
General and administrative expenses were $1,828,675 for the nine months ended September 30, 2019, a decrease of $864,618 or 32.1% compared to the nine months ended September 30, 2018. The decrease was due to (i) lower legal fees as we concluded the Company’s lawsuits against former accounting vendors, (ii) lower payroll and related taxes, and (iii) lower other general and administrative cost (travel and entertainment), partially offset by (vi) increased director fees (from having period-over-period, a five-member Board compared to a four-member Board in previous year).
~~The following table summarizes our general and administrative expenses incurred during the nine months ended September 30, 2019 and 2018:~~
For the Nine Months Ended
September 30, Increase/
2019 2018 (Decrease) % Change

General and administrative:
Depreciation $ 4,084 $ 4,084 $ (0 ) 0.0 %
Directors fees 288,750 137,107 151,643 110.6 %
Insurance 130,894 146,433 (15,539 ) -10.6 %
Legal and litigation 418,719 1,173,040 (754,321 ) -64.3 %
Other general and administrative cost 92,582 236,267 (143,685 ) -60.8 %
Payroll and taxes 253,601 356,948 (103,347 ) -29.0 %
Professional fees 610,755 633,750 (22,995 ) -3.6 %
Rent and utilities 29,290 5,664 23,626 417.1 %
Total general and administrative $ 1,828,675 $ 2,693,293 $ (864,618 ) -32.1 %
~~Other Income/(Expense)~~
Other income decreased by $104,181 from $884,341 for the nine months ended September 30, 2018 to $780,160 for the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the matters with former accounting vendors Bible Harris Smith, PC (“BHS”) and RSM US LLP (“RSM”) were resolved pursuant to a settlement between these parties and the Company, the terms of which are confidential. During the nine months ended September 30, 2018, the matter with BDO, the Company’s former external audit firm, was resolved pursuant to a settlement between the party and the Company, the terms of which are confidential.
Interest expense increased by $371,386 from $697,214 for the nine months ended September 30, 2018 to $1,068,600 for the nine months ended September 30, 2019. The increase was due to the increased number of convertible notes payableoutstanding relating to the PRH Notes.

Liquidity and Capital Resources

Our cash and cash equivalents were ~~$434,787~~$213,739 at ~~September 30, 2019,~~March 31, 2020, compared to ~~$50,986~~$590,706 at December 31, ~~2018.~~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 ~~$232,261,515~~$235,643,889 as of ~~September 30, 2019.~~March 31, 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.

Management’s plans include selling our equity securities and obtaining other financing to fund our capital requirement and on-going operations, including the ~~2017~~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.

18
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.
18

Access to Capital

Management plans to access capital resources through possible public or private equity offerings, including the ~~2017~~2020 Financing, exchange offers, debt financings, corporate collaborations or other means. If we are unable to raise sufficient capital through the ~~2017~~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 ~~2019~~2020 and beyond. We anticipate that these funds will otherwise come from the proceeds of private placement transactions, including the ~~2017~~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.

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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 8.9.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors that were disclosed in ~~our Annual Report on~~the 2019 Form 10-K, ~~for~~other than set forth below.
Our business, financial condition and results of operations may be adversely affected by the ~~year ended December 31, 2018.~~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. The severe acute respiratory syndrome (SARS)-associated CoV-2 (SARS-CoV-2) pandemic, which was reported to have begun in late-2019 and has spread worldwide, 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.

~~2017~~2020 Financing

During the three months ended ~~September 30, 2019,~~March 31, 2020, the Company entered into additional ~~PRH~~2020 Notes with a related party investor in the aggregate principal amount of $100,000. As of March 31, 2020, the Company had drawn down the entire $100,000 under these notes.
During the three months ended March 31, 2020, the Company entered into additional 2020 Notes with non-related party accredited investors in the aggregate principal amount of ~~$410,000.~~$200,000. As of ~~September 30, 2019,~~March 31, 2020, the Company had drawn down the entire ~~$410,000~~$200,000 under these notes.

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 ~~PRH~~2017 and 2020 Notes, refer to our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 as filed with the SEC on March ~~7, 2019.~~5, 2020.

~~Incentive Compensation to Consultants~~
During the three months ended September 30, 2019, the Company issued 25,000 shares of common stock to an advisory board member in connection with the contract entered into on August 1, 2019. During the three months ended September 30, 2019, the Company issued 25,000 three-year immediately vested warrants to a consultant to purchase an aggregate of 25,000 shares of common stocks with an exercise price of $0.2862 per share. 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.
20
20

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

10.1
Form of PRH 2 Secured Convertible Promissory Note (incorporated by reference to Exhibit 4.1 of the Company’s current report on Form 8-K filed on January 7, 2020).
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.

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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.

~~November 12, 2019~~May 13, 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)

22

	For the Three Month Ended					For the Nine Months Ended
	September 30,					September 30,
	2019			2018		2019			2018
Expected terms (years)		3.00			n/a		3.00-5.00			n/a
Expected volatility		131	%		n/a		129-131	%		n/a
Risk free interest rate		1.82	%		n/a		1.82-2.23	%		n/a
Expected dividends		0.00	%		n/a		0.00	%		n/a

	Nine Months End September 30, 2019			Three Months Ended March 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	66,952
Operating cash flows used in operating leases				$	22,441

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	265,550		$	-

Weighted Average Remaining Lease Term
Operating leases		2.75 Years			2.25 Years

Weighted Average Discount Rate
Operating leases		8.0	%		8.0	%

For the Years Ending December 31,	Amount
Years				Amount

2019	$	24,687
2020		90,666			68,225
2021		92,471			92,471
2022		46,687			46,688
Total future minimum lease payments		254,511			207,384
Less: amount representing imputed interest		(29,444	)		(19,781	)
Total	$	225,067		$	187,603

	●	Transiting the plasmalemma (i.e., the cell membrane) of cancer cells. PV-10 penetrates the cell membrane of cancerous ~~cells. The plasmalemma previously protected~~cells which normally protects the cancer cell from its surrounding environment. PV-10, however, is excluded from normal ~~cells,~~cells;

	●	Accumulating in the lysosomes of cancer cells. As noted above, the physicochemical properties of lysosomes trap ~~PV-10,~~PV-10;

	●	Triggering the release of lysosomal contents. Acute autolysis ~~occurs~~can occur within ~~30 to~~ 60 minutes. Early preclinical work by Provectus on PV-10’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,~~carcinoma;

	●	Inducing the rapid cell death of cancer cells. Early trypan blue exclusion work by Provectus confirmed cell death within ~~hours,~~hours; and,

	●	Intracellular pH consistency with the release of acidic lysosomal contents. Early ~~SNARF-1~~seminaphthorhodafluor-1 (“SNARF-1”) staining work by Provectus confirmed lower intracellular pH upon exposure to PV-10 ~~(rose bengal)~~(RB).

	●	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.

	For the Three Months Ended
	September 30,						Increase/
	2019			2018			(Decrease)			% Change

Operating Expenses:
Research and development	$	1,004,454		$	528,355		$	476,099			90.1	%
General and administrative		438,359			829,406			(391,047	)		-47.1	%
Total Operating Expenses		1,442,813			1,357,761			85,052			6.3	%

Total Operating Loss		(1,442,813	)		(1,357,761	)		(85,052	)		6.3	%
Other Income/(Expense):
Gain on settlement of lawsuits		-			-			-			0.0	%
Research and development tax credit		(826	)		-			(826	)		100.0	%
Investment and interest income		1,140			4,931			(3,791	)		-76.9	%
Interest expense		(377,576	)		(256,173	)		(121,403	)		47.4	%

Net Loss	$	(1,820,075	)	$	(1,609,003	)	$	(211,072	)		13.1	%

Exhibit No.		Description

10.1		Form of PRH 2 Secured Convertible Promissory Note (incorporated by reference to Exhibit 4.1 of the Company’s current report on Form 8-K filed on January 7, 2020).

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.

	PROVECTUS BIOPHARMACEUTICALS, INC.

~~November 12, 2019~~May 13, 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)