e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2011
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o |
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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 000-09410
PROVECTUS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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90-0031917 |
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.) |
7327 Oak Ridge Highway, Suite A, Knoxville, Tennessee 37931
(Address of principal executive offices) (Zip Code)
866-594-5999
(Registrants telephone number, including area code)
N/A
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
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 and post such files).
o Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). o Yes þ No
The number of shares outstanding of the registrants common stock, par value $.001 per share, as of
July 18, 2011 was 108,659,601. The number of shares outstanding of the issuers 8% convertible
preferred stock, par value $.001 per share, as of July 18, 2011 was 4,293,332.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PROVECTUS PHARMACEUTICALS, INC.
(A Development-Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, |
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December 31, |
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2011 |
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2010 |
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(Unaudited) |
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(Audited) |
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Assets |
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Current Assets |
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|
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Cash and cash equivalents |
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$ |
14,390,120 |
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$ |
8,086,200 |
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Prepaid expenses and other current assets |
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93,665 |
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|
|
|
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|
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Total Current Assets |
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14,483,785 |
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8,086,200 |
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Equipment and furnishings, less accumulated depreciation of $413,219 and $409,442 |
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23,690 |
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21,320 |
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Patents, net of amortization of $5,782,817 and $5,447,257, respectively |
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5,932,628 |
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6,268,188 |
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Other assets |
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27,000 |
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|
27,000 |
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$ |
20,467,103 |
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$ |
14,402,708 |
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Liabilities and Stockholders Equity |
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Current Liabilities |
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Accounts payable trade |
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$ |
373,043 |
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$ |
418,477 |
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Accrued compensation and payroll taxes |
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168,537 |
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|
781,262 |
|
Accrued consulting expense |
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71,000 |
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|
110,000 |
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Other accrued expenses |
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40,000 |
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|
40,000 |
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|
|
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Total Current Liabilities |
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652,580 |
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1,349,739 |
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Warrant liability |
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5,039,950 |
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2,353,396 |
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Total Liabilities |
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5,692,530 |
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|
3,703,135 |
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Stockholders Equity |
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Preferred stock; par value $.001 per share; 25,000,000 shares
authorized; 4,218,332 and 5,389,998 shares issued and outstanding,
respectively, liquidation preference (in aggregate $3,227,973 and
$4,122,245, respectively) |
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4,218 |
|
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|
5,390 |
|
Common stock; par value $.001 per share; 150,000,000 authorized;
108,659,601 and 91,297,883 shares issued and outstanding, respectively |
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108,660 |
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|
91,298 |
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Paid-in capital |
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110,551,690 |
|
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|
96,952,908 |
|
Deficit accumulated during the development stage |
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|
(95,889,995 |
) |
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|
(86,350,023 |
) |
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|
|
|
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|
|
|
|
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Total Stockholders Equity |
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14,774,573 |
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10,699,573 |
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|
|
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|
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|
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|
|
|
|
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$ |
20,467,103 |
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$ |
14,402,708 |
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See accompanying notes to consolidated financial statements.
1
PROVECTUS PHARMACEUTICALS, INC.
(A Development-Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Cumulative |
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Three Months |
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Six Months |
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Amounts from |
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Ended |
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Ended |
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January 17, 2002 |
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Three Months |
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June 30, 2010 |
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Six Months |
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June 30, 2010 |
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(Inception) |
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Ended |
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(As Restated |
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Ended |
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(As Restated |
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Through |
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June 30, 2011 |
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Note 8) |
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June 30, 2011 |
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Note 8) |
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June 30, 2011 |
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Revenues |
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OTC product revenue |
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$ |
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$ |
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$ |
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$ |
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$ |
25,648 |
|
Medical device revenue |
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|
|
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|
|
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14,109 |
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Total revenues |
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39,757 |
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|
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|
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|
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Cost of sales |
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15,216 |
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Gross profit |
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24,541 |
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Operating expenses |
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|
|
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Research and development |
|
|
2,007,368 |
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|
|
2,130,349 |
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|
3,529,472 |
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|
2,923,283 |
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|
32,814,970 |
|
General and
administrative |
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|
3,203,814 |
|
|
|
3,223,699 |
|
|
|
5,707,485 |
|
|
|
5,131,052 |
|
|
|
51,270,486 |
|
Amortization |
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|
167,780 |
|
|
|
167,780 |
|
|
|
335,560 |
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|
|
335,560 |
|
|
|
5,782,817 |
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|
|
|
|
|
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|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
Total operating loss |
|
|
(5,378,962 |
) |
|
|
(5,521,828 |
) |
|
|
(9,572,517 |
) |
|
|
(8,389,895 |
) |
|
|
(89,843,732 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Gain on sale of fixed assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Loss on extinguishment of
debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(825,867 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
213 |
|
|
|
268 |
|
|
|
369 |
|
|
|
318 |
|
|
|
650,712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on change in fair
value of warrant liability |
|
|
843,271 |
|
|
|
2,137,746 |
|
|
|
32,176 |
|
|
|
1,502,747 |
|
|
|
2,171,821 |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
Net interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,098,004 |
) |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
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|
Net loss |
|
|
(4,535,478 |
) |
|
|
(3,383,814 |
) |
|
|
(9,539,972 |
) |
|
|
(6,886,830 |
) |
|
$ |
(95,889,995 |
) |
|
|
|
|
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|
Dividends on preferred stock |
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|
(64,224 |
) |
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|
(2,244,392 |
) |
|
|
(134,158 |
) |
|
|
(10,216,635 |
) |
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|
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|
Net loss applicable to
common shareholders |
|
$ |
(4,599,702 |
) |
|
$ |
(5,628,206 |
) |
|
$ |
(9,674,130 |
) |
|
$ |
(17,103,465 |
) |
|
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|
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Basic and diluted loss per
common share |
|
$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.23 |
) |
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|
Weighted average number of
common shares outstanding
basic and diluted |
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|
105,794,099 |
|
|
|
78,132,005 |
|
|
|
101,914,292 |
|
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|
73,580,080 |
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|
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See accompanying notes to consolidated financial statements.
2
PROVECTUS PHARMACEUTICALS, INC.
(A Development-Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Unaudited)
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|
|
|
|
Preferred Stock |
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|
Common Stock |
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|
|
|
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|
Number of |
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|
Number of |
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|
Paid in |
|
|
Accumulated |
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|
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|
|
Shares |
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|
Par Value |
|
|
Shares |
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|
Par Value |
|
|
capital |
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|
Deficit |
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|
Total |
|
Balance, at January 17, 2002 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance to founding shareholders |
|
|
|
|
|
|
|
|
|
|
6,000,000 |
|
|
|
6,000 |
|
|
|
(6,000 |
) |
|
|
|
|
|
|
|
|
Sale of stock |
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
50 |
|
|
|
24,950 |
|
|
|
|
|
|
|
25,000 |
|
Issuance of stock to employees |
|
|
|
|
|
|
|
|
|
|
510,000 |
|
|
|
510 |
|
|
|
931,490 |
|
|
|
|
|
|
|
932,000 |
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
|
120 |
|
|
|
359,880 |
|
|
|
|
|
|
|
360,000 |
|
Net loss for the period from
January 17, 2002 (inception) to
April 23, 2002 (date of reverse
merger) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,316,198 |
) |
|
|
(1,316,198 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
Balance, at April 23, 2002 |
|
|
|
|
|
$ |
|
|
|
|
6,680,000 |
|
|
$ |
6,680 |
|
|
$ |
1,310,320 |
|
|
$ |
(1,316,198 |
) |
|
$ |
802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Shares issued in reverse merger |
|
|
|
|
|
|
|
|
|
|
265,763 |
|
|
|
266 |
|
|
|
(3,911 |
) |
|
|
|
|
|
|
(3,645 |
) |
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
1,900,000 |
|
|
|
1,900 |
|
|
|
5,142,100 |
|
|
|
|
|
|
|
5,144,000 |
|
Purchase and retirement of stock |
|
|
|
|
|
|
|
|
|
|
(400,000 |
) |
|
|
(400 |
) |
|
|
(47,600 |
) |
|
|
|
|
|
|
(48,000 |
) |
Stock issued for acquisition of
Valley Pharmaceuticals |
|
|
|
|
|
|
|
|
|
|
500,007 |
|
|
|
500 |
|
|
|
12,225,820 |
|
|
|
|
|
|
|
12,226,320 |
|
Exercise of warrants |
|
|
|
|
|
|
|
|
|
|
452,919 |
|
|
|
453 |
|
|
|
|
|
|
|
|
|
|
|
453 |
|
Warrants issued in connection
with convertible debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126,587 |
|
|
|
|
|
|
|
126,587 |
|
Stock and warrants issued for
acquisition of Pure-ific |
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
25 |
|
|
|
26,975 |
|
|
|
|
|
|
|
27,000 |
|
Net loss for the period from
April 23, 2002 (date of
reverse merger) to December 31,2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,749,937 |
) |
|
|
(5,749,937 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2002 |
|
|
|
|
|
$ |
|
|
|
|
9,423,689 |
|
|
$ |
9,424 |
|
|
$ |
18,780,291 |
|
|
$ |
(7,066,135 |
) |
|
$ |
11,723,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
764,000 |
|
|
|
764 |
|
|
|
239,036 |
|
|
|
|
|
|
|
239,800 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,479 |
|
|
|
|
|
|
|
145,479 |
|
Stock to be issued for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
281,500 |
|
|
|
|
|
|
|
281,500 |
|
Employee compensation from stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,659 |
|
|
|
|
|
|
|
34,659 |
|
Issuance of stock pursuant to
Regulation S |
|
|
|
|
|
|
|
|
|
|
679,820 |
|
|
|
680 |
|
|
|
379,667 |
|
|
|
|
|
|
|
380,347 |
|
Beneficial conversion related to
convertible debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
601,000 |
|
|
|
|
|
|
|
601,000 |
|
Net loss for the year ended
December 31, 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,155,313 |
) |
|
|
(3,155,313 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2003 |
|
|
|
|
|
$ |
|
|
|
|
10,867,509 |
|
|
$ |
10,868 |
|
|
$ |
20,461,632 |
|
|
$ |
(10,221,448 |
) |
|
$ |
10,251,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
733,872 |
|
|
|
734 |
|
|
|
449,190 |
|
|
|
|
|
|
|
449,923 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
495,480 |
|
|
|
|
|
|
|
495,480 |
|
Exercise of warrants |
|
|
|
|
|
|
|
|
|
|
132,608 |
|
|
|
133 |
|
|
|
4,867 |
|
|
|
|
|
|
|
5,000 |
|
Employee compensation from stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,612 |
|
|
|
|
|
|
|
15,612 |
|
Issuance of stock pursuant to
Regulation S |
|
|
|
|
|
|
|
|
|
|
2,469,723 |
|
|
|
2,469 |
|
|
|
790,668 |
|
|
|
|
|
|
|
793,137 |
|
Issuance of stock and warrants
pursuant to Regulation D |
|
|
|
|
|
|
|
|
|
|
1,930,164 |
|
|
|
1,930 |
|
|
|
1,286,930 |
|
|
|
|
|
|
|
1,288,861 |
|
Beneficial conversion related to
convertible debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,256 |
|
|
|
|
|
|
|
360,256 |
|
Issuance of convertible debt
with warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,250 |
|
|
|
|
|
|
|
105,250 |
|
Repurchase of beneficial
conversion feature |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(258,345 |
) |
|
|
|
|
|
|
(258,345 |
) |
Net loss for the year ended
December 31, 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,344,525 |
) |
|
|
(4,344,525 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2004 |
|
|
|
|
|
$ |
|
|
|
|
16,133,876 |
|
|
$ |
16,134 |
|
|
$ |
23,711,540 |
|
|
$ |
(14,565,973 |
) |
|
$ |
9,161,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
226,733 |
|
|
|
227 |
|
|
|
152,058 |
|
|
|
|
|
|
|
152,285 |
|
Issuance of stock for interest
payable |
|
|
|
|
|
|
|
|
|
|
263,721 |
|
|
|
264 |
|
|
|
195,767 |
|
|
|
|
|
|
|
196,031 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,534,405 |
|
|
|
|
|
|
|
1,534,405 |
|
Issuance of warrants for
contractual obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
985,010 |
|
|
|
|
|
|
|
985,010 |
|
Exercise of warrants and stock
options |
|
|
|
|
|
|
|
|
|
|
1,571,849 |
|
|
|
1,572 |
|
|
|
1,438,223 |
|
|
|
|
|
|
|
1,439,795 |
|
Employee compensation from stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,752 |
|
|
|
|
|
|
|
15,752 |
|
Issuance of stock and warrants
pursuant to Regulation D |
|
|
|
|
|
|
|
|
|
|
6,221,257 |
|
|
|
6,221 |
|
|
|
6,506,955 |
|
|
|
|
|
|
|
6,513,176 |
|
Debt conversion to common stock |
|
|
|
|
|
|
|
|
|
|
3,405,541 |
|
|
|
3,405 |
|
|
|
3,045,957 |
|
|
|
|
|
|
|
3,049,362 |
|
Issuance of warrants with
convertible debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,574,900 |
|
|
|
|
|
|
|
1,574,900 |
|
Beneficial conversion related to
convertible debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,633,176 |
|
|
|
|
|
|
|
1,633,176 |
|
Beneficial conversion related to
interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,529 |
|
|
|
|
|
|
|
39,529 |
|
Repurchase of beneficial
conversion feature |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(144,128 |
) |
|
|
|
|
|
|
(144,128 |
) |
Net loss for the year ended 2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,763,853 |
) |
|
|
(11,763,853 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2005 |
|
|
|
|
|
$ |
|
|
|
|
27,822,977 |
|
|
$ |
27,823 |
|
|
$ |
40,689,144 |
|
|
$ |
(26,329,826 |
) |
|
$ |
14,387,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
719,246 |
|
|
|
719 |
|
|
|
676,024 |
|
|
|
|
|
|
|
676,743 |
|
Issuance of stock for interest
payable |
|
|
|
|
|
|
|
|
|
|
194,327 |
|
|
|
195 |
|
|
|
183,401 |
|
|
|
|
|
|
|
183,596 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
370,023 |
|
|
|
|
|
|
|
370,023 |
|
Exercise of warrants and stock
options |
|
|
|
|
|
|
|
|
|
|
1,245,809 |
|
|
|
1,246 |
|
|
|
1,188,570 |
|
|
|
|
|
|
|
1,189,816 |
|
Employee compensation from stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,862,456 |
|
|
|
|
|
|
|
1,862,456 |
|
Issuance of stock and warrants
pursuant to Regulation D |
|
|
|
|
|
|
|
|
|
|
10,092,495 |
|
|
|
10,092 |
|
|
|
4,120,329 |
|
|
|
|
|
|
|
4,130,421 |
|
Debt conversion to common stock |
|
|
|
|
|
|
|
|
|
|
2,377,512 |
|
|
|
2,377 |
|
|
|
1,573,959 |
|
|
|
|
|
|
|
1,576,336 |
|
Beneficial conversion related to
interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,447 |
|
|
|
|
|
|
|
16,447 |
|
Net loss for the year ended 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,870,579 |
) |
|
|
(8,870,579 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2006 |
|
|
|
|
|
$ |
|
|
|
|
42,452,366 |
|
|
$ |
42,452 |
|
|
$ |
50,680,353 |
|
|
$ |
(35,200,405 |
) |
|
$ |
15,522,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
150 |
|
|
|
298,800 |
|
|
|
|
|
|
|
298,950 |
|
Issuance of stock for interest
payable |
|
|
|
|
|
|
|
|
|
|
1,141 |
|
|
|
1 |
|
|
|
1,257 |
|
|
|
|
|
|
|
1,258 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
472,635 |
|
|
|
|
|
|
|
472,635 |
|
Exercise of warrants and stock
options |
|
|
|
|
|
|
|
|
|
|
3,928,957 |
|
|
|
3,929 |
|
|
|
3,981,712 |
|
|
|
|
|
|
|
3,985,641 |
|
Employee compensation from stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,340,619 |
|
|
|
|
|
|
|
2,340,619 |
|
Issuance of stock and warrants
pursuant to Regulation D |
|
|
|
|
|
|
|
|
|
|
2,376,817 |
|
|
|
2,377 |
|
|
|
1,845,761 |
|
|
|
|
|
|
|
1,848,138 |
|
Debt conversion to common stock |
|
|
|
|
|
|
|
|
|
|
490,000 |
|
|
|
490 |
|
|
|
367,010 |
|
|
|
|
|
|
|
367,500 |
|
Net loss for the year ended 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,005,631 |
) |
|
|
(10,005,631 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2007 |
|
|
|
|
|
$ |
|
|
|
|
49,399,281 |
|
|
$ |
49,399 |
|
|
$ |
59,988,147 |
|
|
$ |
(45,206,036 |
) |
|
$ |
14,831,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
350,000 |
|
|
|
350 |
|
|
|
389,650 |
|
|
|
|
|
|
|
390,000 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
517,820 |
|
|
|
|
|
|
|
517,820 |
|
Exercise of warrants and stock
options |
|
|
|
|
|
|
|
|
|
|
3,267,795 |
|
|
|
3,268 |
|
|
|
2,636,443 |
|
|
|
|
|
|
|
2,639,711 |
|
Employee compensation from stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,946,066 |
|
|
|
|
|
|
|
1,946,066 |
|
Net loss for the year ended 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,269,571 |
) |
|
|
(10,269,571 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2008 |
|
|
|
|
|
$ |
|
|
|
|
53,017,076 |
|
|
$ |
53,017 |
|
|
$ |
65,478,126 |
|
|
$ |
(55,475,607 |
) |
|
$ |
10,055,536 |
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
796,012 |
|
|
|
796 |
|
|
|
694,204 |
|
|
|
|
|
|
|
695,000 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,064,210 |
|
|
|
|
|
|
|
1,064,210 |
|
Exercise of warrants and stock
options |
|
|
|
|
|
|
|
|
|
|
3,480,485 |
|
|
|
3,480 |
|
|
|
2,520,973 |
|
|
|
|
|
|
|
2,524,453 |
|
Employee compensation from stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
870,937 |
|
|
|
|
|
|
|
870,937 |
|
Issuance of stock and warrants
pursuant to Regulation D |
|
|
|
|
|
|
|
|
|
|
10,116,653 |
|
|
|
10,117 |
|
|
|
6,508,571 |
|
|
|
|
|
|
|
6,518,688 |
|
Net loss for the year ended 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,322,314 |
) |
|
|
(12,322,314 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2009 |
|
|
|
|
|
$ |
|
|
|
|
67,410,226 |
|
|
$ |
67,410 |
|
|
$ |
77,137,021 |
|
|
$ |
(67,797,921 |
) |
|
$ |
9,406,510 |
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
776,250 |
|
|
|
776 |
|
|
|
855,837 |
|
|
|
|
|
|
|
856,613 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,141,593 |
|
|
|
|
|
|
|
1,141,593 |
|
Exercise of warrants and stock
options |
|
|
|
|
|
|
|
|
|
|
3,491,014 |
|
|
|
3,491 |
|
|
|
3,100,189 |
|
|
|
|
|
|
|
3,103,680 |
|
Issuance of common stock
pursuant to Regulation S |
|
|
|
|
|
|
|
|
|
|
559,000 |
|
|
|
559 |
|
|
|
418,691 |
|
|
|
|
|
|
|
419,250 |
|
Issuance of common stock and
warrants pursuant to Regulation
D |
|
|
|
|
|
|
|
|
|
|
11,168,067 |
|
|
|
11,169 |
|
|
|
6,335,820 |
|
|
|
|
|
|
|
6,346,989 |
|
Issuance of preferred stock
pursuant to Regulation D |
|
|
13,283,324 |
|
|
|
13,283 |
|
|
|
|
|
|
|
|
|
|
|
4,204,107 |
|
|
|
|
|
|
|
4,217,390 |
|
Preferred stock conversions into common stock |
|
|
(7,893,326 |
) |
|
|
(7,893 |
) |
|
|
7,893,326 |
|
|
|
7,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation from stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,759,650 |
|
|
|
|
|
|
|
3,759,650 |
|
Net loss for the year ended 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,552,102 |
) |
|
|
(18,552,102 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2010 |
|
|
5,389,998 |
|
|
$ |
5,390 |
|
|
|
91,297,883 |
|
|
$ |
91,298 |
|
|
$ |
96,952,908 |
|
|
$ |
(86,350,023 |
) |
|
$ |
10,699,573 |
|
Issuance of stock for services |
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
150 |
|
|
|
147,100 |
|
|
|
|
|
|
|
147,250 |
|
Issuance of warrants for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
389,172 |
|
|
|
|
|
|
|
389,172 |
|
Exercise of warrants and stock
options |
|
|
|
|
|
|
|
|
|
|
6,485,522 |
|
|
|
6,485 |
|
|
|
6,304,724 |
|
|
|
|
|
|
|
6,311,209 |
|
Issuance of common stock and
warrants pursuant to Regulation
D |
|
|
|
|
|
|
|
|
|
|
9,554,532 |
|
|
|
9,555 |
|
|
|
6,757,786 |
|
|
|
|
|
|
|
6,767,341 |
|
Preferred stock conversions into
common stock |
|
|
(1,171,666 |
) |
|
|
(1,172 |
) |
|
|
1,171,664 |
|
|
|
1,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the six months
ended June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,539,972 |
) |
|
|
(9,539,972 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at June 30, 2011 |
|
|
4,218,332 |
|
|
$ |
4,218 |
|
|
|
108,659,601 |
|
|
$ |
108,660 |
|
|
$ |
110,551,690 |
|
|
$ |
(95,889,995 |
) |
|
$ |
14,774,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
3
PROVECTUS PHARMACEUTICALS, INC.
(A Development-Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months |
|
|
Cumulative |
|
|
|
|
|
|
|
Ended |
|
|
Amounts from |
|
|
|
Six Months |
|
|
June 30, 2010 |
|
|
January 17, 2002 |
|
|
|
Ended |
|
|
(As Restated |
|
|
(Inception) through |
|
|
|
June 30, 2011 |
|
|
Note 8) |
|
|
June 30, 2011 |
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,539,972 |
) |
|
$ |
(6,886,830 |
) |
|
$ |
(95,889,995 |
) |
Adjustments to reconcile net loss to net cash used in
operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
3,777 |
|
|
|
4,689 |
|
|
|
436,220 |
|
Amortization of patents |
|
|
335,560 |
|
|
|
335,560 |
|
|
|
5,782,817 |
|
Amortization of original issue discount |
|
|
|
|
|
|
|
|
|
|
3,845,721 |
|
Amortization of commitment fee |
|
|
|
|
|
|
|
|
|
|
310,866 |
|
Amortization of prepaid consultant expense |
|
|
|
|
|
|
|
|
|
|
1,295,226 |
|
Amortization of deferred loan costs |
|
|
|
|
|
|
|
|
|
|
2,261,584 |
|
Accretion of United States Treasury Bills |
|
|
|
|
|
|
|
|
|
|
(373,295 |
) |
Loss on extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
825,867 |
|
Loss on exercise of warrants |
|
|
|
|
|
|
|
|
|
|
236,146 |
|
Beneficial conversion of convertible interest |
|
|
|
|
|
|
|
|
|
|
55,976 |
|
Convertible interest |
|
|
|
|
|
|
|
|
|
|
389,950 |
|
Compensation through issuance of stock options |
|
|
|
|
|
|
254,149 |
|
|
|
10,845,751 |
|
Compensation through issuance of stock |
|
|
|
|
|
|
|
|
|
|
932,000 |
|
Issuance of stock for services |
|
|
147,250 |
|
|
|
508,113 |
|
|
|
8,411,511 |
|
Issuance of warrants for services |
|
|
389,172 |
|
|
|
999,991 |
|
|
|
4,128,599 |
|
Issuance of warrants for contractual obligations |
|
|
|
|
|
|
|
|
|
|
985,010 |
|
Gain on sale of equipment |
|
|
|
|
|
|
|
|
|
|
(55,075 |
) |
Gain on change in fair value of warrant liability |
|
|
(32,176 |
) |
|
|
(1,502,747 |
) |
|
|
(2,171,821 |
) |
Change in assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
(93,665 |
) |
|
|
(218,044 |
) |
|
|
(93,665 |
) |
Accounts payable |
|
|
(45,434 |
) |
|
|
(153,379 |
) |
|
|
369,398 |
|
Accrued expenses |
|
|
(651,725 |
) |
|
|
108,922 |
|
|
|
429,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(9,487,213 |
) |
|
|
(6,549,576 |
) |
|
|
(57,042,042 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of fixed assets |
|
|
|
|
|
|
|
|
|
|
180,075 |
|
Capital expenditures |
|
|
(6,147 |
) |
|
|
|
|
|
|
(74,035 |
) |
Proceeds from sales of investments |
|
|
|
|
|
|
|
|
|
|
37,010,481 |
|
Purchases of investments |
|
|
|
|
|
|
|
|
|
|
(36,637,186 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities |
|
|
(6,147 |
) |
|
|
|
|
|
|
479,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from loans from stockholder |
|
|
|
|
|
|
|
|
|
|
174,000 |
|
Proceeds from convertible debt |
|
|
|
|
|
|
|
|
|
|
6,706,795 |
|
Net proceeds from sales of preferred stock and warrants |
|
|
|
|
|
|
8,908,131 |
|
|
|
8,908,131 |
|
Net proceeds from sales of common stock and warrants |
|
|
9,486,071 |
|
|
|
5,194,589 |
|
|
|
37,750,079 |
|
Proceeds from exercises of warrants and stock options |
|
|
6,311,209 |
|
|
|
1,718,150 |
|
|
|
20,765,912 |
|
Cash paid to retire convertible debt |
|
|
|
|
|
|
|
|
|
|
(2,385,959 |
) |
Cash paid for deferred loan costs |
|
|
|
|
|
|
|
|
|
|
(747,612 |
) |
Premium paid on extinguishments of debt |
|
|
|
|
|
|
|
|
|
|
(170,519 |
) |
Purchase and retirement of common stock |
|
|
|
|
|
|
|
|
|
|
(48,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
15,797,280 |
|
|
|
15,820,870 |
|
|
|
70,952,827 |
|
|
|
|
|
|
|
|
|
|
|
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months |
|
|
Cumulative |
|
|
|
|
|
|
|
Ended |
|
|
Amounts from |
|
|
|
Six Months |
|
|
June 30, 2010 |
|
|
January 17, 2002 |
|
|
|
Ended |
|
|
(As Restated |
|
|
(Inception) through |
|
|
|
June 30, 2011 |
|
|
Note 8) |
|
|
June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
$ |
6,303,920 |
|
|
$ |
9,271,294 |
|
|
$ |
14,390,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, at beginning of period |
|
$ |
8,086,200 |
|
|
$ |
3,237,178 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, at end of period |
|
$ |
14,390,120 |
|
|
$ |
12,508,472 |
|
|
$ |
14,390,120 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Noncash Investing and Financing Activities:
During the six months ended June 30, 2011 the Company has reclassified $485,467 from warrant
liability to equity due to exercise of warrants.
See accompanying notes to consolidated financial statements.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America for
interim financial information pursuant to Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 2011 are not necessarily indicative
of the results that may be expected for the year ended December 31, 2011. The Company has
evaluated subsequent events through the date the financial statements were issued.
2. Recapitalization and Merger
Provectus Pharmaceuticals, Inc., formerly known as Provectus Pharmaceutical, Inc. and SPM Group,
Inc., was incorporated under Colorado law on May 1, 1978. SPM Group ceased operations in 1991,
and became a development-stage company effective January 1, 1992, with the new corporate purpose of
seeking out acquisitions of properties, businesses, or merger candidates, without limitation as to
the nature of the business operations or geographic location of the acquisition candidate.
On April 1, 2002, SPM Group changed its name to Provectus Pharmaceutical, Inc. and reincorporated
in Nevada in preparation for a transaction with Provectus Pharmaceuticals, Inc., a privately-held
Tennessee corporation (PPI). On April 23, 2002, an Agreement and Plan of Reorganization between
Provectus Pharmaceutical and PPI was approved by the written consent of a majority of the
outstanding shares of Provectus Pharmaceutical. As a result, Provectus Pharmaceuticals, Inc.
issued 6,680,000 shares of common stock in exchange for all of the issued and outstanding shares of
PPI. As part of the acquisition, Provectus Pharmaceutical changed its name to Provectus
Pharmaceuticals, Inc. and PPI became a wholly-owned subsidiary of Provectus. This transaction was
recorded as a recapitalization of PPI.
On November 19, 2002, the Company acquired Valley Pharmaceuticals, Inc., a privately-held Tennessee
corporation formerly known as Photogen, Inc., by merging PPI with and into Valley and naming the
surviving corporation Xantech Pharmaceuticals, Inc. Photogen, Inc. was separated from Photogen
Technologies, Inc. in a non-pro-rata split-off to some of its shareholders. The assets of
Photogen, Inc. consisted primarily of the equipment and intangibles related to its therapeutic
activity and were recorded at their fair value. The majority shareholders of Valley were also the
majority shareholders of Provectus. Valley had no revenues prior to the transaction with the
Company. By acquiring Valley, the Company acquired its intellectual property, including issued
U.S. patents and patentable inventions.
3. Basic and Diluted Loss Per Common Share
Basic and diluted loss per common share is computed based on the weighted average number of common
shares outstanding. Loss per share excludes the impact of outstanding options and warrants and
convertible preferred stock as they are antidilutive. Potential common shares excluded from the
calculation at June 30, 2011 and 2010, respectively, relate to 24,348,302 and 28,170,564 from
warrants, 11,290,956 and 8,715,955 from options, and 4,218,332 and 13,283,324 from convertible
preferred shares. Included in the weighted average number of shares outstanding are 223,214 and
473,567 common shares committed to be issued but not outstanding at June 30, 2011 and 2010,
respectively.
4. Equity Transactions
(a) During the three months ended March 31, 2011, the Company issued 75,000 shares of
common stock to consultants in exchange for services. Consulting costs charged to operations were
$67,000. During the three months ended June 30, 2011, the Company issued 75,000 shares of common
stock to consultants in exchange for services. Consulting costs charged to operations were
$80,250.
(b) During the three months ended March 31, 2011, the Company issued 641,500 warrants to
consultants in exchange for services. Consulting costs charged to operations were $389,172.
During the three months ended March 31, 2011, 1,497,328 warrants were exercised for $1,400,001
resulting in 1,497,328 common shares being issued. 2,048,671 warrants were exercised in December
2010 and the corresponding cash of $1,915,509 was received in January 2011 and common shares of
2,048,671 were issued in January 2011. During the three months ended March 31, 2011, 193,333
warrants were forfeited. During the three months ended June 30, 2011, 2,322,857 warrants were
exercised for $2,171,801 resulting in 2,322,857 common shares being issued.
6
(c) In January 2011, we directed Lincoln Park Capital Fund, LLC to purchase
50,000 shares of our common stock for an aggregate purchase price of $44,665. The Company issued
2,233 common shares to Lincoln Park at a fair market value of $1,995 as commitment shares in
consideration for Lincoln Park to enter into the purchase agreement. In addition to the foregoing
investment, under the purchase agreement, we may, in our sole discretion, direct Lincoln Park to
purchase up to an additional $29,950,000 of our common stock over the 30-month term of the purchase
agreement at no less than $0.75 per share. However, under a securities purchase agreement that we
entered into in January 2011, we have agreed not to draw down on the Lincoln Park purchase
agreement until on or after November 16, 2011. On January 13, 2011, the Company and certain
investors entered into a securities purchase agreement, pursuant to which the Company agreed to
sell in a registered direct public offering an aggregate of 5,454,550 shares of its common stock
and warrants to purchase a total of 7,527,279 shares of its common stock to such investors for
aggregate gross proceeds of $5,100,004. The warrants consist of the following: Series A Warrants
to purchase up to 40% of the shares of common stock, Series B Warrants to purchase up to 70% of the
shares of common stock, and Series C Warrants to purchase up to 28% of the common stock. The
Series A Warrants and the Series C Warrants have an exercise price of $1.12 per share, subject to
adjustment, and expire five years after their issuance. The Series B Warrants have an exercise
price $0.935 per share, subject to adjustment, and expire 150 days after their issuance. The Series
C Warrants are only exercisable to the extent that the Series B Warrants are exercised and only in
the same percentage that the Series B Warrants are exercised. At March 31, 2011, 1,497,328 of the
Series B Warrants were exercised resulting in 598,931 of the Series C Warrants becoming
exercisable. The Series A Warrants and Series C Warrants contain additional anti-dilution
provisions such that, subject to customary exceptions, in the event of an issuance or deemed
issuance by the Company of common stock or securities convertible into common stock at a price per
share less than the then applicable exercise price, the then applicable exercise price will be
reduced to the new issuance price. The Company determined that these warrants should be classified
as liabilities in accordance with Financial Accounting Standards Board Accounting Standards
Codification 815-40-15-5 ( ASC 815 ), Determining Whether an Instrument (or Embedded
Feature) Is Indexed to an Entitys Own Stock, because the warrants in question contain exercise
price reset features that require the exercise price of the warrants be adjusted if the Company
issues certain other equity related instruments at a lower price per share. The value of the
warrant liability was determined based on the Monte-Carlo Simulation model at the date the warrants
were issued. The Series B Warrants do not contain exercise reset provisions. However, the Series
B Warrants required the Company to deliver registered shares of common stock and if the Company was
not in a position to do so when the shares are exercised, it is assumed they would have to settle
the shares in cash. As a result, the Series B Warrants were recorded as a liability in accordance
with ASC 815 and recorded at fair value on the date of issuance using a Black-Scholes option
pricing model. The warrant liability initially recorded on January 13, 2011 for all three series
of warrants was $3,204,197. During the three months ended March 31, 2011, 1,497,328 of the Series
B Warrants were exercised. The Company determined the fair value of the warrants exercised on the
date of exercise and adjusted
the related warrant liability for this amount, resulting in a gain of
$188,509. The adjusted fair value of the Series B Warrants exercised of $211,569 was reclassified
into additional paid-in capital. At March 31, 2011, the warrant liability for the remaining
warrants was revalued resulting in a loss on change in fair value of warrant liability of $10,306.
During the three months ended June 30, 2011, the remainder of the Series B Warrants were exercised
which was a total of 2,320,857. The Company determined the fair value of the warrants exercised on
the date of exercise and adjusted the related warrant liability for this amount, resulting in a
gain of $272,077. The adjusted fair value of the Series B Warrants exercised of $273,898 was
reclassified into additional paid-in capital. At June 30, 2011, the warrant liability for the
remaining warrants was revalued resulting in a gain on change in fair value of warrant liability of
$138,995.
On April 20, 2011, the Company completed a private offering of common stock and warrants to
accredited investors for gross proceeds of $4,615,300. The Company accepted subscriptions, in the
aggregate, for 4,120,803 shares of common stock, one year warrants to purchase 2,060,402 shares of
common stock, and five year warrants to purchase 2,060,402 shares of common stock. Investors
received one year warrants and five year warrants, in each case, to purchase up to 50% of the
number of shares purchased by the investors in the offering. The warrants have an exercise price of
$1.25 per share. The purchase price for each share of common stock together with the warrants was
$1.12. 223,214 of the 4,120,803 common shares sold were committed to be issued but not outstanding
at June 30, 2011. These shares were subsequently issued in July 2011. The Company intends to use
the proceeds, after deducting offering expenses estimated to be $25,000, for working capital and
other general corporate purposes. Network 1 Financial Securities, Inc. served as placement agent
for the offering. In connection with the offering, the Company issued five year warrants to
purchase 649,518 shares of common stock with an exercise price of $1.12 to Network 1 Financial
Securities, Inc., which represents 20% of the total number of shares of common stock sold to
investors solicited by Network 1 Financial Securities, Inc.
(d) The Company determined that the warrants issued in March and April, 2010 with the 8%
convertible preferred stock should be classified as liabilities in accordance with ASC 815 because
the warrants in question contain exercise price reset features that require the exercise price of
the warrants be adjusted if the Company issues certain other equity related instruments at a lower
price per share. The value of the warrant liability was determined based on the Monte-Carlo
Simulation model at the date the warrants were issued. The warrant liability is then revalued at
each subsequent quarterend, including at March 31, 2011. At March 31, 2011 there was a loss
recognized from the revaluation of the warrant liability of $989,298. At June 30, 2011 there was a
gain recognized from the revaluation of the warrant liability of $432,199.
Dividends on the 8% Convertible Preferred Stock accrue at an annual rate of 8% of the original
issue price and are payable in either cash or common stock. If the dividend is paid in common
stock, the number of shares of common stock will equal the quotient of the amount of cash dividends
divided by the market price of the stock on the dividend payment date. The dividends are payable
quarterly on the 15th day after the quarter-end. The Company anticipates paying
the dividends in common stock. The Company has a deficit and, as a result, the dividends are
recorded against additional paid-in capital. In January 2011, the Company issued 82,169 shares of
common stock in dividends on preferred stock in lieu of cash dividends due as of January 15, 2011.
At March 31, 2011, the Company recognized dividends of $69,934 which are included in dividends on
preferred stock on the consolidated statement of operations. During the three months ended March
31, 2011 there were 500,001 shares of the Companys redeemable preferred stock that converted into
499,999 shares of the Companys common stock. In April 2011, the Company issued 67,991 shares of
common stock in dividends on preferred stock in lieu of cash dividends due as of April 15, 2011.
At June 30, 2011, the Company recognized dividends of $64,224 which are included in dividends on
preferred stock on the consolidated statement of operations. During the three months ended June
30, 2011 there were 671,665 shares of the Companys redeemable preferred stock that converted into
671,665 shares of the Companys common stock. In July 2011, the Company issued 63,043 shares of
common stock in dividends on preferred stock in lieu of cash dividends due as of July 15, 2011.
5. Stock-Based Compensation
One employee of the Company exercised 133,333 options at an exercise price of $0.75 per share of
common stock for $100,000 during the three months ended March 31, 2011. One employee of the
Company exercised 350,000 options at an exercise price of $1.00 per share of common stock for
$350,000 during the three months ended June 30, 2011. Another employee of the Company exercised
133,333 options at an exercise price of $0.75 per share of common stock for $100,000 during the
three months ended June 30, 2011. There were no options issued for the three and six months ended
June 30, 2011 and no stock-based compensation expense recognized for the three and six months ended
June 30, 2011 and 2010.
6. Related Party Transaction
The Company paid one non-employee member of the board $90,000 for consulting services
performed as of June 30, 2011. The Company paid another non-employee member of the board $12,000
for consulting services performed as of June 30, 2011.
7
7. Fair Value of Financial Instruments
The FASBs authoritative guidance on fair value measurements establishes a framework for measuring
fair value, and expands disclosure about fair value measurements. This guidance enables the reader
of the financial statements to assess the inputs used to develop those measurements by establishing
a hierarchy for ranking the quality and reliability of the information used to determine fair
values. Under this guidance, assets and liabilities carried at fair value must be classified and
disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
In determining the appropriate levels, the Company performs a detailed analysis of the assets and
liabilities that are measured and reported on a fair value basis. At each reporting period, all
assets and liabilities for which the fair value measurement is based on significant unobservable
inputs are classified as Level 3. The fair value of derivative instruments is determined by
management with the assistance of an independent third party valuation specialist. The warrant
liability is a derivative instrument and is classified as Level 3. The Company used the
Monte-Carlo Simulation model to estimate the fair value of the warrants except for the Series B
Warrants. Significant assumptions used at March 31, 2011 for the 2010 warrants include a weighted
average term of 4.0 years, a 5% probability that the warrant exercise price would be reset,
volatility of 70.7% and a risk free interest rate of 2.24%. Significant assumptions used at June
30, 2011 for the 2010 warrants include a weighted average term of 3.7 years, a 5% probability that
the warrant exercise price would be reset, volatility of 67.7% and a risk free interest rate of
1.29%. Significant assumptions used at March 31, 2011 for the 2011 warrants include a weighted
average term of 4.8 years, a 5% probability that the warrant exercise price would be reset, a
volatility range between 70.65% and 70.67% and a risk free interest rate range between 1.99% and
2.24%. Significant assumptions used at June 30, 2011 for the 2011 warrants include a weighted
average term of 4.5 years, a 5% probability that the warrant exercise price would be reset, a
volatility of 67.7% and a risk free interest rate of 1.76%. For the Series B Warrants the
Black-Scholes method was used to estimate the fair value of the warrants resulting in a warrant
liability of $757,542 at March 31, 2011. There was no warrant liability for the Series B Warrants
at June 30, 2011 because they had all been exercised at June 30, 2011.
The warrant liability measured at fair value on a recurring basis is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
Derivative instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability at June 30, 2011 |
|
$ |
5,039,950 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,039,950 |
|
Warrant liability at December 31, 2010 |
|
$ |
2,353,396 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
2,353,396 |
|
A reconciliation of the warranty liability measured at fair value on a recurring basis with
the use of significant unobservable inputs (Level 3) from January 1, 2011 to June 30, 2011 follows:
|
|
|
|
|
Balance at January 1, 2011 |
|
$ |
2,353,396 |
|
|
|
|
|
|
Issuance of warrants |
|
|
3,204,197 |
|
Net gain included in earnings |
|
|
(32,176 |
) |
Exercise of warrants |
|
|
(485,467 |
) |
|
|
|
|
|
|
|
|
|
Balance at June 30, 2011 |
|
$ |
5,039,950 |
|
|
|
|
|
8. Restatement
Restatement of June 30, 2010
The Company issued warrants to purchase 5,291,654 shares of the Companys common stock in March
2010 and warrants to purchase 1,350,000 shares of the Companys common stock in April 2010
(collectively, the Warrants). The Warrants have an exercise price of $1.00 per share and expire
five years after their issuance. The Warrants contain certain anti-dilution provisions pursuant to
which future issuances or deemed issuances of warrants, in certain circumstances as defined in the
agreement, without consideration or for consideration per share less than the applicable exercise
price in effect immediately prior to such issue, will result in the exercise price of the Warrants
being reduced to the consideration per share received by the Company for such deemed issue. The
Company originally classified the Warrants as equity in its 2010 quarterly filings.
8
The Company has determined that the Warrants should be classified as liabilities in accordance
with ASC 815 due to the anti-dilution provisions contained in the Warrants. The Company reflected
the necessary adjustment in the fourth quarter of 2010 and calculated the impact on its quarterly
reports on Form 10-Q for the quarterly periods ending March 31, June 30, and September 30, 2010.
The applicable line items on the Form 10-Q Consolidated Statements of Operations have been restated
below for the three and six month periods ending June 30, 2010.
The Company determined its quantitative valuation of the Warrants using a Monte-Carlo Simulation
model. Management of the Company believes that the Monte-Carlo Simulation model is appropriate
because it is a dynamic model, which accommodates variable inputs.
The impact of the application of ASC 815 on the affected line items of the Companys quarterly
financial statement is set forth below:
* * * * *
Consolidated Statement of Operations
for the Three Months Ended June 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Previously Reported |
|
Adjustments |
|
As Restated |
Total operating loss |
|
$ |
(5,521,828 |
) |
|
$ |
|
|
|
$ |
(5,521,828 |
) |
Gain on change in fair value of warrant liability |
|
|
|
|
|
|
2,137,746 |
|
|
|
2,137,746 |
|
Net loss |
|
|
(5,521,560 |
) |
|
|
2,137,746 |
|
|
|
(3,383,814 |
) |
Dividends on preferred stock |
|
|
(2,590,033 |
) |
|
|
345,641 |
|
|
|
(2,244,392 |
) |
Net loss applicable to common shareholders |
|
|
(8,111,593 |
) |
|
|
2,483,387 |
|
|
|
(5,628,206 |
) |
Basic and diluted loss per common share |
|
|
(0.10 |
) |
|
|
|
|
|
|
(0.07 |
) |
Consolidated Statement of Operations
for the Six Months Ended June 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Previously Reported |
|
Adjustments |
|
As Restated |
Total operating loss |
|
$ |
(8,389,895 |
) |
|
$ |
|
|
|
$ |
(8,389,895 |
) |
Gain on change in fair value of warrant liability |
|
|
|
|
|
|
1,502,747 |
|
|
|
1,502,747 |
|
Net loss |
|
|
(8,389,577 |
) |
|
|
1,502,747 |
|
|
|
(6,886,830 |
) |
Dividends on preferred stock |
|
|
(10,947,617 |
) |
|
|
730,982 |
|
|
|
(10,216,635 |
) |
Net loss applicable to common shareholders |
|
|
(19,337,194 |
) |
|
|
2,233,729 |
|
|
|
(17,103,465 |
) |
Basic and diluted loss per common share |
|
|
(0.26 |
) |
|
|
|
|
|
|
(0.23 |
) |
9
|
|
|
ITEM 2. |
|
MANAGEMENTS 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, our Annual Report on Form 10-K/A for the year ended
December 31, 2010, which includes additional information about our critical accounting policies and
practices and risk factors, and Item 1A of Part II of this report, which updates those 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.
Plan of Operation
We have implemented our integrated business plan, including execution of the current and next
phases in clinical development of our pharmaceutical products and continued execution of research
programs for new research initiatives.
We intend to proceed as rapidly as possible with a licensure of our dermatology drug product
candidate (PH-10) on the basis of our Phase 2 atopic dermatitis and psoriasis results, which are in
process of being further developed. We intend to also proceed as rapidly as possible with a
majority stake asset sale and subsequent licensure of our OTC products that can be sold with a
minimum of regulatory compliance and with the further development of revenue sources through a
majority stake asset sale and subsequent licensing of our existing medical device, imaging, and
biotech intellectual property portfolio. Although we believe that there is a reasonable basis for
our expectation that we will become profitable due to both the licensure of PH-10 and the asset
sale of a majority stake via a spin-out transaction of the wholly-owned subsidiaries that contain
the non-core assets and subsequent licensure of our non-core products, we cannot assure you that we
will be able to achieve, or maintain, a level of profitability sufficient to meet our operating
expenses.
Our current plans include continuing to operate with our four employees during the immediate
future, but we have added two additional consultants to the two we already had, and anticipate
adding additional personnel if necessary in the next 12 months. Our current plans also include
minimal purchases of new property, plant and equipment, and increased research and development for
additional clinical trials.
We believe that our prescription drug candidates PV-10 and PH-10 provide us with two products in
multiple indications, which have been shown in clinical trials to be safe to treat serious cancers
and diseases of the skin. We continue to develop clinical trials for these products to show their
safety and efficacy, which we believe will be shown based on data in previous studies. Together
with our OTC products, medical device, biotech and other non-core technologies, which we intend to
sell or license in the future, we believe this combination represents the foundation for maximizing
shareholder value this year and next.
Results of Operations
Comparison of Three and Six Months Ended June 30, 2011 and June 30, 2010
Revenues
We had no revenue during the three and six months ended June 30, 2011 and 2010.
Research and Development
Research and development costs of $2,007,368 for the three months ended June 30, 2011 included
payroll of $1,224,777, consulting and contract labor of $684,230, legal of $34,111, insurance of
$12,500, lab supplies and pharmaceutical preparations of $29,979, rent and utilities of $19,862,
and depreciation expense of $1,909. Research and development costs of $2,130,349 for the three
months ended June 30, 2010 included payroll of $1,749,395, consulting and contract labor of
$232,640, legal of $58,347, insurance of $12,500, lab supplies and pharmaceutical preparations of
$59,268, rent and utilities of $16,116, and depreciation expense of $2,083. The decrease in
payroll is the result of a decrease in bonuses and no stock-based compensation expense. The
increase in consulting and contract labor is due primarily to the completion of both the Liver
Phase 1 study as well as the completion of enrollment for the Psoriasis Phase 2C study.
Research and development costs of $3,529,472 for the six months ended June 30, 2011 included
payroll of $2,154,524, consulting and contract labor of $1,216,111, legal of $56,507, insurance of
$29,247, lab supplies and pharmaceutical preparations of $33,864, rent and utilities of $35,442,
and depreciation expense of $3,777. Research and development costs of $2,923,283 for the six
months ended June 30, 2010 included payroll of $2,328,835, consulting and contract labor of
$323,250, legal of $91,156, insurance of $25,000, lab supplies and pharmaceutical preparations of
$117,500, rent and utilities of $32,853, and depreciation expense of $4,689. The decrease in
payroll is the result of no stock-based compensation expense. The increase of approximately
$800,000 in consulting and contract labor is primarily the result of an increase in manufacturing
preparation, characterization and specifications for PV-10 and PH-10, as well as an increase in
intellectual property related consulting expense. Additionally, there was an increase in
consulting and contract labor due to the completion of both the Liver Phase 1 study as well as the
completion of enrollment for the Psoriasis Phase 2C study.
General and Administrative
General and administrative expenses decreased by $19,885 in the three months ended June 30, 2011 to
$3,203,814 from $3,223,699 for the three months ended June 30, 2010.
General and administrative expenses increased by $576,433 in the six months ended June 30, 2011 to
$5,707,485 from $5,131,052 for the six months ended June 30, 2010. The increase resulted primarily
from additional investor relations and conference expenses.
10
Investment Income
Investment income was insignificant in both the three and six months ended June 30, 2011 and 2010.
Liquidity and Capital Resources
Our cash and cash equivalents were $14,390,120 at June 30, 2011, compared with $8,086,200 at
December 31, 2010. The increase of approximately $6,300,000 was due primarily to proceeds from the
sale of common stock as well as the exercise of warrants and stock options.
At our current cash expenditure rate, we believe our cash and cash equivalents on hand at June 30,
2011 will be sufficient to meet our current and planned operating needs until well into 2013
without consideration being given to additional cash inflows that might occur from the exercise
of existing warrants or future sales of equity securities.
We are seeking to improve our cash flow through both the licensure of PH-10 on the basis of our
Phase 2 atopic dermatitis and psoriasis results, and the majority stake asset sale and licensure of
our OTC products as well as other non-core assets. However, we cannot assure you that we will be
successful in either licensing PH-10 or selling a majority stake of the OTC and other non-core
assets via a spin-out transaction and licensing our existing non-core products. Moreover, even if
we are successful in improving our current cash flow position, we nonetheless plan to seek
additional funds to meet our long-term requirements in 2013 and beyond. We anticipate that these
funds will otherwise come from the proceeds of private placements, the exercise of existing
warrants outstanding, 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 shareholders.
Critical Accounting Policies
Managements discussion and analysis of financial condition and results of operations is based upon
our consolidated financial statements, which have been prepared in accordance with GAAP. The
preparation of these consolidated financial statements requires management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and expenses.
Management bases its estimates on historical experience and assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions. We
believe there have been no material changes to the items that we disclosed as our critical
accounting policies under Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations, in our 2010 Form 10-K/A.
New Accounting Pronouncements
None.
Contractual Obligations Leases
We lease office and laboratory space in Knoxville, Tennessee, on an annual basis, renewable for one
year at our option. We have no lease commitments as of June 30, 2011. We are currently leasing on
a month-to-month basis.
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 managements current knowledge, assumptions,
beliefs, estimates, and expectations and express managements current views of future performance,
results, and trends and may be identified by their use of terms such as anticipate, believe,
could, estimate, expect, intend, may, plan, predict, project, 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.
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 Securities
and Exchange Commission (including those described in Item 1A of our Annual Report on Form 10-K/A
for the year ended December 31, 2010, and elsewhere in this Quarterly Report on Form 10-Q), and the
following:
|
|
our ability to license our dermatology drug product candidate,
PH-10, on the basis of our Phase 2 atopic dermatitis and psoriasis
results, which are in the process of being further developed; |
11
|
|
our determination, based on guidance of the FDA, whether to
proceed with or without a partner with a Phase 3 trial of PV-10 to
treat metastatic melanoma and the costs associated with such a
trial; |
|
|
|
our determination whether to license our metastatic melanoma drug
product candidate, and other solid tumors such as liver cancer,
PV-10, if such licensure is appropriate considering the timing and
structure of such a license, or to commercialize PV-10 on our own
to treat metastatic melanoma and other solid tumors such as liver
cancer; and |
|
|
|
our ability to raise additional capital if we determine to commercialize PV-10 on our own. |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We had no holdings of financial or commodity instruments as of June 30, 2011, other than cash and
cash equivalents, short-term deposits, money market funds, and interest bearing investments in U.S.
governmental debt securities. We have accounted for certain warrants issued in March and April
2010 and January 2011 as liabilities at their fair value upon issuance, which are remeasured at
each period end with the change in fair value recorded in the statement of operations. See note 4
of interim financial statements contained in this Quarterly Report on Form 10-Q.
All of our business is transacted in U.S. dollars and, accordingly, foreign exchange rate
fluctuations have not had a significant impact on us, and they are not expected to have a
significant impact on us in the foreseeable future.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures. Our chief executive officer and chief
financial officer have evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as that term is defined in Rule 13a-15(e) under the Exchange Act) as of
June 30, 2011, the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. Based
on that evaluation, the chief executive officer and chief financial officer have concluded that our
disclosure controls and procedures are effective.
(b) Changes in Internal Controls. 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 other than the following related to properly recording certain complex
financial instruments.
Management assessed the effectiveness of our internal control over financial reporting as of
December 31, 2010, using the criteria set forth in Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based
on that assessment, we identified a material weakness in our internal controls. A material
weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of our annual
or interim financial statements will not be prevented or detected on a timely basis. A material
weakness regarding managements lack of expertise to account for complex financial instruments has
been identified by management. Specifically, we did not properly account for the issuance of
certain warrants in accordance with Accounting Standards Codification 815-40-15 Determining
Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own Stock in its Quarterly
filings in 2010. Accordingly, we have restated the previously issued 2010 quarterly financial
statements. See Note 12 to our consolidated financial statements contained in our Annual Report on
Form 10-K/A for the year ended December 31, 2010, for a full discussion of the effects of this
restatement. Subsequent to December 31, 2010, to remediate the material weakness, management hired
a consultant to help them analyze and account for complex financial instruments.
12
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company was not involved in any legal proceedings during the fiscal quarter covered by this
Quarterly Report on Form 10-Q.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors listed in Part I, Item 1A. Risk Factors
in our Annual Report on Form 10-K/A for the year ended December 31, 2010. Such risk factors should
be considered carefully with the information provided elsewhere in this report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the three months ended March 31, 2011, the Company issued 75,000 shares of common stock to a
consultant in exchange for services. Consulting costs charged to operations were $67,000. During
the three months ended March 31, 2011, the Company issued warrants to purchase an aggregate of
641,500 shares of common stock to consultants in exchange for services, consisting of warrants to
purchase 200,000 shares at an exercise price of $2.00 per share with a five year term, warrants to
purchase 200,000 shares at an exercise price of $1.75 per share with a five year term, warrants to
purchase 21,500 shares at an exercise price of $1.12 per share with a three year term, warrants to
purchase 110,000 shares at an exercise price of $1.12 per share with a five year term, warrants to
purchase 10,000 shares at an exercise price of $1.12 per share with a one year term, and warrants
to purchase 100,000 shares at an exercise price of $1.00 per share with a three year term.
Consulting costs charged to operations for the warrants were $389,172.
During the three months ended June 30, 2011, the Company issued 75,000 shares of common stock to
consultants in exchange for services. Consulting costs charged to operations were $80,250. On
April 20, 2011, the Company completed a private offering of common stock and warrants to accredited
investors for gross proceeds of $4,615,300. The Company accepted subscription, in the aggregate,
for 4,120,803 shares of common stock, one year warrants to purchase 2,060,402 shares of common
stock, and five year warrants to purchase 2,060,402 shares of common stock. Investors received one
year warrants and five year warrants, in each case, to purchase up to 50% of the number of shares
purchased by the investors in the offering. The warrants have an exercise price of $1.25 per share.
The purchase price for each share of common stock together with the warrants was $1.12. 223,214 of
the 4,120,803 common shares sold were committed to be issued but not outstanding at June 30, 2011.
These shares were subsequently issued in July 2011. The Company intends to use the proceeds, after
deducting offering expenses estimated to be $25,000, for working capital and other general
corporate purposes. Network 1 Financial Securities, Inc. served as placement agent for the
offering. In connection with the offering, the Company issued five year warrants to purchase
649,518 shares of common stock with an exercise price of $1.12 to Network 1 Financial Securities,
Inc., which represents 20% of the total number of shares of common stock sold to investors
solicited by Network 1 Financial Securities, Inc.
The issuances of the securities were exempt from the registration requirements of the Securities
Act of 1933 by virtue of Section 4(2) and Regulation D.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. [Removed and Reserved.]
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS
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|
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Exhibit |
|
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No. |
|
Description |
|
|
|
31.1
|
|
Certification of Chief 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 Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350 (Section 906 Certification). |
|
|
|
101
|
|
Interactive Data Files.* |
* The
documents formatted in XBRL (Extensible Business Reporting Language)
and attached as Exhibit 101 to this report are deemed not filed as
part of a registration statement or prospectus for purposes of
Section 11 or 12 of the Securities Act, are deemed not filed for
purposes of Section 18 of the Exchange Act, and otherwise are not
subject to liability under these sections.
13
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.
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PROVECTUS PHARMACEUTICALS, INC.
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August 9, 2011 |
By: |
/s/ Peter R. Culpepper
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Peter R. Culpepper |
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Chief Financial Officer and Chief
Operating Officer |
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14
EXHIBIT INDEX
|
|
|
Exhibit |
|
|
No. |
|
Description |
|
|
|
31.1
|
|
Certification of Chief 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 Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350 (Section 906 Certification). |
|
|
|
101
|
|
Interactive Data Files. |