PROVECTUS BIOPHARMACEUTICALS, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (Marcum LLP, PCAOB ID No. 688 ) F-1 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-2 Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021 F-3 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2022 and 2021 F-4 Consolidated Statements of Changes In Stockholders’ Deficit for the Years Ended December 31, 2022 and 2021 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-6 Notes to Consolidated Financial Statements F-7 – F-24 27 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Provectus Biopharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Provectus Biopharmaceuticals, Inc. and Subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficit, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit s . We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Marcum LLP Marcum llp We have served as the Company’s auditor since 2016. Los Angeles, CA March 29, 2023 F- 1 PROVECTUS BIOPHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS December 31, December 31, 2022 2021 Assets Current Assets: Cash and cash equivalents $ 21,605 $ 682,984 Restricted cash 1,410,102 2,423,958 Short-term receivables 394 5,107 Prepaid expenses and other current assets 467,081 329,908 Total Current Assets 1,899,182 3,441,957 Equipment and furnishings, less accumulated depreciation of $ 102,073 and $ 91,178 , respectively 20,941 31,836 Operating lease right-of-use asset 117,123 39,563 Total Assets $ 2,037,246 $ 3,513,356 Liabilities and Stockholders’ Deficit Current Liabilities: Accounts payable $ 2,094,258 $ 1,287,459 Deposit for Series D-1 Preferred Stock - 150,000 Unearned grant revenue 1,510,958 2,500,000 Other accrued expenses 2,404,012 2,002,486 Accrued interest 30,844 10,578 Accrued interest - related parties 40,992 6,044 Notes payable 239,394 238,452 Convertible notes payable 625,000 1,260,000 Convertible notes payable - related parties 1,202,500 200,000 Operating lease liability, current portion 44,422 45,617 Total Current Liabilities 8,192,380 7,700,636 Operating lease liability, non-current portion 73,376 - Total Liabilities 8,265,756 7,700,636 Commitments, contingencies, and litigations (Note 16) - Stockholders’ Deficit: Preferred stock; par value $ 0.001 per share; 25,000,000 shares authorized; Series D Convertible Preferred Stock; 12,374,000 shares designated; 12,373,247 shares issued and outstanding at December 31, 2022 and December 31, 2021; aggregate liquidation preference of $ 14,164,889 at December 31, 2022 and December 31, 2021 12,373 12,373 Series D-1 Convertible Preferred Stock; 11,241,000 shares designated; 9,746,626 and 9,218,449 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively; aggregate liquidation preference of $ 111,578,880 and $ 105,532,804 at December 31, 2022 and December 31, 2021, respectively 9,747 9,219 Preferred stock value 9,747 9,219 Common stock; par value $ 0.001 per share; 1,000,000,000 shares authorized; 419,497,119 and 419,447,119 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively 419,497 419,447 Additional paid-in capital 242,954,193 241,440,106 Accumulated other comprehensive loss ( 35,679 ) ( 34,467 ) Accumulated deficit ( 249,588,641 ) ( 246,033,958 ) Total Stockholders’ Deficit ( 6,228,510 ) ( 4,187,280 ) Total Liabilities and Stockholders’ Deficit $ 2,037,246 $ 3,513,356 See accompanying notes to consolidated financial statements. F- 2 PROVECTUS BIOPHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 2022 2021 Grant Revenue $ 989,042 $ - Operating Expenses: Research and development 2,389,360 2,608,357 General and administrative 2,027,628 2,063,897 Total Operating Expenses 4,416,988 4,672,254 Total Operating Loss ( 3,427,946 ) ( 4,672,254 ) Other Income/(Expense): Research and development tax credit 36,954 31,315 Gain from forgiveness of PPP loan and interest - 63,094 Interest expense, net ( 163,691 ) ( 961,698 ) Total Other Expense, Net ( 126,737 ) ( 867,289 ) Net Loss $ ( 3,554,683 ) $ ( 5,539,543 ) Basic and Diluted Loss Per Common Share $ ( 0.01 ) $ ( 0.01 ) Weighted Average Number of Common Shares Outstanding - Basic and Diluted 419,470,338 408,223,004 See accompanying notes to consolidated financial statements. F- 3 PROVECTUS BIOPHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS For the Years Ended December 31, 2022 2021 Net Loss $ ( 3,554,683 ) $ ( 5,539,543 ) Other Comprehensive Loss: Foreign currency translation adjustments ( 1,212 ) ( 370 ) Total Comprehensive Loss $ ( 3,555,895 ) $ ( 5,539,913 ) See accompanying notes to consolidated financial statements. F- 4 PROVECTUS BIOPHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 Accumulated Preferred Stock Preferred Stock Preferred Stock Additional Other Series B Series D Series D-1 Common Stock Paid-In Comprehensive Accumulated Shares Amount Shares Amount Shares Amount Shares Amount Capital Loss Deficit Total Balance at January 1, 2021 100 $ - - $ - - $ - 398,807,037 $ 398,808 $ 209,923,347 $ ( 34,097 ) $ ( 240,494,415 ) $ ( 30,206,357 ) Common stock issued upon exercise of warrants - - - - - - 18,052,966 18,053 944,170 - - 962,223 Stock-based compensation: Common stock - - - - - - 300,000 300 22,899 - - 23,199 Warrants - - - - - - - - 488 - - 488 Conversion of Series B Preferred Stock to Common Stock ( 100 ) - - - - - 65,666 65 ( 65 ) - - Conversion of PRH Notes to Series D Preferred Stock - - 12,373,247 12,373 - - - - 3,528,849 - - 3,541,222 Conversion of PRH Notes to Series D1 Preferred Stock - - - - 9,440,594 9,441 - - 27,022,417 - - 27,031,858 Conversion of Series D-1 Preferred Stock to Common stock - - - - ( 222,145 ) ( 222 ) 2,221,450 2,221 ( 1,999 ) - - - Comprehensive loss: Net loss - - - - - - - - - - ( 5,539,543 ) ( 5,539,543 ) Other comprehensive loss - - - - - - - - - ( 370 ) - ( 370 ) Balance at December 31, 2021 - $ - 12,373,247 $ 12,373 9,218,449 $ 9,219 419,447,119 $ 419,447 $ 241,440,106 $ ( 34,467 ) $ ( 246,033,958 ) $ ( 4,187,280 ) Balance - $ - 12,373,247 $ 12,373 9,218,449 $ 9,219 419,447,119 $ 419,447 $ 241,440,106 $ ( 34,467 ) $ ( 246,033,958 ) $ ( 4,187,280 ) Series D-1 Preferred Stock issued for cash - - - - 52,411 52 - - 149,948 - - 150,000 Stock-based compensation: Common stock - - - - - - 50,000 50 2,975 - - 3,025 Conversion of 2021 Notes to Series D-1 Preferred Stock - - - - 475,766 476 - - 1,361,164 - - 1,361,640 Comprehensive loss: Net loss - - - - - - - - - ( 3,554,683 ) ( 3,554,683 ) Other comprehensive loss - - - - - - - - - ( 1,212 ) - ( 1,212 ) Balance at December 31, 2022 - $ - 12,373,247 $ 12,373 9,746,626 $ 9,747 419,497,119 $ 419,497 $ 242,954,193 $ ( 35,679 ) $ ( 249,588,641 ) $ ( 6,228,510 ) Balance - $ - 12,373,247 $ 12,373 9,746,626 $ 9,747 419,497,119 $ 419,497 $ 242,954,193 $ ( 35,679 ) $ ( 249,588,641 ) $ ( 6,228,510 ) See accompanying notes to consolidated financial statements. F- 5 PROVECTUS BIOPHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2022 2021 Cash Flows From Operating Activities: Net loss $ ( 3,554,683 ) $ ( 5,539,543 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 3,025 23,688 Non-cash lease expense 52,883 81,258 Depreciation 10,895 12,865 Gain on forgiveness of PPP Loan and interest - ( 63,094 ) Changes in operating assets and liabilities Short term receivables 4,481 ( 1,449 ) Prepaid expenses and other current assets 122,914 265,957 Accounts payable 807,073 331,148 Unearned grant revenue ( 989,042 ) 2,500,000 Other accrued expenses 402,390 502,581 Operating lease liability ( 58,262 ) ( 83,549 ) Accrued interest 156,854 956,834 Net Cash Used In Operating Activities ( 3,041,472 ) ( 1,013,304 ) Cash Flows From Financing Activities: Proceeds from issuance of convertible notes payable 625,000 2,960,000 Proceeds from issuance of convertible notes payable - related parties 1,002,500 200,000 Repayment of short-term note payable ( 259,659 ) ( 248,177 ) Deposit for purchase of Series D-1 Preferred Stock - 150,000 Proceeds from exercise of warrants - 962,223 Net Cash Provided By Financing Activities 1,367,841 4,024,046 Effect of exchange rates on cash, cash equivalents, and restricted cash ( 1,604 ) ( 1,031 ) Net (Decrease) Increase In Cash, Cash Equivalents, and Restricted Cash ( 1,675,235 ) 3,009,711 Cash, Cash Equivalents, and Restricted Cash, Beginning of Year 3,106,942 97,231 Cash, Cash Equivalents, and Restricted Cash, End of Year $ 1,431,707 $ 3,106,942 Cash, cash equivalents and restricted cash consisted of the following: Cash and cash equivalents $ 21,605 $ 682,984 Restricted cash 1,410,102 2,423,958 Cash, Cash Equivalents, and Restricted Cash, End of Year $ 1,431,707 $ 3,106,942 Supplemental Disclosures of Cash Flow Information: Cash paid during the year for: Interest $ - $ - Income taxes $ - $ - Non-cash investing and financing activities: Purchase of insurance policies financed by short-term note payable $ ( 203,175 ) $ ( 273,347 ) Deposit applied to equity issuances $ ( 150,000 ) $ - Conversion of non-amended 2017 Notes to Series D Preferred Stock $ - $ 3,541,222 Conversion of amended 2017 Notes and 2020 Notes to Series D-1 Preferred Stock $ - $ 27,031,858 Conversion of Series D-1 Preferred Stock to Common stock $ - $ 222 Conversion of 2021 Notes to Series D-1 Preferred Stock $ 1,361,640 $ - Right-of-use asset for lease liability $ ( 130,443 ) $ - See accompanying notes to consolidated financial statements. F- 6 PROVECTUS BIOPHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Business Organization and Nature of Operations Provectus Biopharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, “Provectus” or “the Company”), is a clinical-stage biotechnology company developing immunotherapy medicines for different diseases that are based on a class of synthetic small molecule immuno-modulators called halogenated xanthenes (“HXs”). Our lead molecule is named rose bengal sodium (“RBS”). The Company’s proprietary, patented, pharmaceutical-grade RBS is the active pharmaceutical ingredient in the drug product candidates of our current clinical development programs and the preclinical formulations of our current drug discovery programs. Importantly, our pharmaceutical-grade RBS displays different therapeutic effects at different concentrations and can be formulated for delivery by different routes of administration. The Company believes that RBS targets disease in a bifunctional manner. First, direct contact may lead to cell death or repair depending on the disease being treated and the concentration of the RBS utilized in the treatment. Secondly, multivariate immune signaling, activation, and response may follow that may manifest as stimulatory, inhibitory, or both. The Company believes that it is the first entity to advance an RBS formulation into clinical trials for the treatment of a disease, such as those trials reported on the clinical trials registry ClinicalTrials.gov. The Company believes that it is the first and only entity to date to successfully, reproducibly, and consistently make pharmaceutical-grade RBS at a purity of nearly 100%. The Company’s small molecule HX medical science platform comprises a number of different drug product candidates and preclinical pharmaceutical-grade RBS formulations using different concentrations and delivered by different routes of administration specific to each disease area and/or indication. The Company’s HX medical science platform includes clinical development programs in oncology, dermatology, and ophthalmology; proof-of-concept in vivo drug discovery programs in oncology, hematology, wound healing, and animal health; and preclinical in vitro drug discovery programs in infectious diseases and tissue regeneration and repair. Risks and Uncertainties The Company’s activities are subject to significant risks and uncertainties, including failing to successfully develop and license or commercialize the Company’s prescription drug candidates. Severe acute respiratory syndrome (“SARS”) coronavirus (“CoV”) 2 (“SARS-CoV-2”) was first identified in late-2019 and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the SARS-CoV-2 pandemic, many companies have experienced disruptions of their operations and the markets they serve. The Company has taken several temporary precautionary measures intended to help ensure the well-being of its employees and contractors and to minimize business disruption. The Company considered the impact of SARS-CoV-2 pandemic on its business and operational assumptions and estimates, and determined there were no material adverse impacts on the Company’s results of operations and financial position at December 31, 2022. The full extent of the SARS-CoV-2 pandemic impacts on the Company’s operations and financial condition is uncertain. The Company has experienced slower than normal enrollment and treatment of patients, and a prolonged SARS-CoV-2 pandemic could have a material adverse impact on the Company’s business and financial results, including the timing and ability of the Company to raise capital, 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. To date, the Company has not generated any revenues or profits from planned principal operations. The Company’s activities are subject to significant risks and uncertainties, including failing to successfully develop and license or commercialize the Company’s prescription drug candidates. 2. Liquidity and Going Concern The Company’s cash and restricted cash were $ 1,431,707 at December 31, 2022 which includes $ 1,410,102 of restricted cash resulting from a grant received from the State of Tennessee. The Company’s working capital deficiency was $ 6,293,198 and $ 4,258,679 as of December 31, 2022 and 2021, respectively. The decline in working capital is primarily driven by lower cash on hand and higher accounts payable. 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 consolidated 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, 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 2022 Financing (as defined in Note 5), 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 and debt 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, it will not be able to pay its obligations as they become due. F- 7 The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, the Company cannot assure that it will be successful in co-developing, licensing, and/or commercializing PV-10, PH-10, and/or any other halogenated xanthene-based drug candidate developed by the Company or entering into any 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 2023 and beyond. The Company anticipates that these funds will otherwise come from the proceeds of private placement transactions, the exercise of existing warrants and outstanding stock options, or public offerings of debt or equity securities. While the Company believes that it has a reasonable basis for its expectation that it will be able to raise additional funds, the Company cannot provide assurance that 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. Significant Accounting Policies Principles of Consolidation Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, accrued liabilities and the valuation allowance related to the Company’s deferred tax assets. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. As of December 31, 2022 and 2021, the Company’s cash equivalents consisted of Treasury bills of $ 0 and $ 42,594 , respectively. Restricted Cash Restricted cash consists of a grant award of $ 2,500,000 received in cash from the State of Tennessee less payments to vendors for expenses and deposits in the amount of $ 1,089,898 . See Note 14, Grants. Cash Concentrations Cash, cash equivalents, and restricted cash are maintained at financial institutions and, at times, balances may exceed federally insured limits of $ 250,000 , although the Company seeks to minimize this through treasury management. The Company has never experienced any losses related to these balances although no assurance can be provided that it will not experience any losses in the future. As of December 31, 2022 and 2021, the Company had cash, cash equivalent, and restricted cash balances in excess of FDIC insurance limits of $ 1,181,707 and $ 2,856,942 , respectively. Equipment and Furnishings, net Equipment and furnishings are stated at cost less accumulated depreciation. Depreciation of equipment is provided for using the straight-line method over the estimated useful lives of the assets. Computers and office equipment are being depreciated over five years; furniture and fixtures are being depreciated over ten years. Leasehold improvements are amortized over the lesser of (a) the useful life of the asset; or (b) the remaining lease term. Maintenance and repairs are charged to operations as incurred. The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. Long-Lived Assets The Company reviews the carrying values of its long-lived assets for possible impairment whenever an event or change in circumstances indicates that the carrying amount of the assets may not be recoverable. Any long-lived assets held for disposal are reported at the lower of their carrying amounts or fair value less cost to sell. Management has determined there to be no impairment during the years ended December 31, 2022 and 2021. F- 8 Related Party Receivables Management estimates the reserve for uncollectibility based on existing economic conditions, the financial conditions of the current and former employees, and the amount and age of past due receivables. Receivables are considered past due if full payment is not received by the contractual due date. Past due amounts are generally written off against the reserve for uncollectibility only after all collection attempts have been exhausted. See Note 8, Short-term Receivables. Grant Revenue Grant revenue is recognized when qualifying costs are incurred and there is reasonable assurance that the conditions of the grant have been met. Cash received from grants in advance of incurring qualifying costs is recorded as unearned grant revenue and recognized as grant revenue when qualifying costs are incurred. Research and Development Research and development costs are charged to expense when incurred. An allocation of payroll expenses to research and development is made based on a percentage estimate of time spent. The research and development costs include the following: payroll, consulting and contract labor, lab supplies and pharmaceutical preparations, insurance, rent and utilities, and depreciation and amortization. Patent Costs The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses in the accompanying statements of operations and comprehensive loss. Leases The Company adopted ASC 842 effective January 1, 2019 and applied the available practical expedients to the existing lease which expired on June 30, 2022. The Company applied the standard to the current lease agreement in the same manner. The most significant impact upon adoption was the recognition of ROU assets and lease liabilities for operating leases. Income Taxes The Company accounts for income taxes under the liability method in accordance with Accounting Standards Codification (“ASC”) 740 “Income Taxes”. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established if it is more likely than not that all, or some portion, of deferred income tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, an adjustment to the deferred income tax asset would increase income in the period such determination was made. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination. Any recognized income tax positions would be measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement would be reflected in the period in which the change in judgment occurs. The Company would recognize any corresponding interest and penalties associated with its income tax positions in income tax expense. There were no income taxes, interest or penalties incurred in 2022 or 2021. Convertible Instruments The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with ASC Topic 815: Derivatives and Hedging . The accounting treatment of derivative financial instruments requires that the Company record qualifying embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Embedded conversion options classified as derivative liabilities and any related equity classified freestanding instruments are recorded as a discount to the host instrument. If the instrument is determined to not be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the commitment date fair value to the effective conversion price of the instrument. F- 9 Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ deficit. Basic and Diluted Loss Per Common Share Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: Schedule of Securities Excluded from Calculation of Weighted Average Dilutive Common Shares December 31, 2022 2021 Warrants 475,000 512,500 Options 3,425,000 3,625,000 Convertible preferred stock 109,839,507 104,557,737 2021 unsecured convertible notes 3,973,871 - 2022 unsecured convertible notes 2,662,523 - Total potentially dilutive shares 120,375,901 108,695,237 Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company determines the estimated fair value of amounts presented in these consolidated financial statements using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in the financial statements are not necessarily indicative of the amounts that could be realized in a current exchange between buyer and seller. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. These fair value estimates were based upon pertinent information available as of December 31, 2022 and 2021. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, restricted cash, receivables, other current assets, accounts payable, unearned grant income, and accrued expenses approximate fair value due to the short-term nature of these instruments. The carrying amounts of our credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 Inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 Inputs use directly or indirectly observable inputs. These inputs include quoted prices for similar assets and liabilities in active markets as well as other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 Inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. F- 10 In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in historical company data) inputs. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Foreign Currency Translation The Company’s reporting currency is the United States Dollar. The functional currencies of the Company’s operating subsidiaries are their local currencies (United States Dollar and Australian Dollar). Australian Dollar denominated assets and liabilities of $ 17,373 and $ 383,447 at December 31, 2022 and $ 22,053 and $ 407,851 at December 31, 2021, respectively) are translated into the United States Dollar at the balance sheet date, and net expense accounts of $ 4,503 and $ 85,052 for the years ended December 31, 2022 and 2021, respectively) are translated at a weighted average exchange rate for the years then ended. Equity is translated at historical rates and the resulting foreign currency translation adjustments are included as a component of accumulated other comprehensive loss (“AOCL”), which is a separate component of stockholders’ deficit. Therefore, the U.S. dollar value of the non-equity translated items in the Company’s consolidated financial statements will fluctuate from period to period, depending on the changing value of the U.S. dollar versus these currencies. The Company engages in foreign currency denominated transactions with its Australian subsidiary. At the date that the transaction is recognized, each asset, liability, revenue, expense, gain or loss arising from the transaction is measured and recorded in the functional currency of the recording entity using the exchange rate in effect at that date. At each balance sheet date, recorded monetary balances denominated in a currency other than the functional currency are adjusted using the exchange rate at the balance sheet date, with gains or losses recorded in other income or other expense. Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and then is recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The Company computes the fair value of equity-classified 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. Recently Issued Accounting Standards In August 2020, FASB issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. The Company plans to adopt ASU 2020-06 on January 1, 2023 and does not believe the adoption will have a material impact on the Company’s consolidated financial statements or disclosures. F- 11 Recently Adopted Accounting Pronouncements In October 2020, the FASB issued ASU 2020-10 “Codification Improvements” , which improves consistency by amending the Codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company adopted this standard on January 1, 2022 and it did not have a material effect on its consolidated financial statements. On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to adopt the new standard early in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company adopted this standard on January 1, 2022 and it did not have a material effect on its consolidated financial statements. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), which increases the transparency of government assistance including the disclosure of (1) the type of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. The amendments in this update are effective for the Company in the financial statements issued for annual periods beginning after December 15, 2021. The Company adopted this standard on January 1, 2022 and it did not have a material effect on its consolidated financial statements. 4. Other Accrued Expenses The following table summarizes the other accrued expenses at December 31, 2022 and 2021: Schedule of Other Accrued Expenses For the Years Ended December 31, 2022 2021 Accrued payroll and taxes $ 314,160 $ 174,533 Accrued vacation 69,077 42,871 Accrued directors’ fees 1,945,589 1,560,589 Accrued other expenses 75,186 224,493 Total Other Accrued Expenses $ 2,404,012 $ 2,002,486 5. Convertible Notes Payable The following summarizes convertible note activity during the years ended December 31, 2022 and 2021: Schedule of Convertible Notes Payable 2017 Notes Amended 2017 Notes 2020 Notes 2021 Notes 2022 Notes Total Balance at January 1, 2021 $ 2,712,000 $ 17,355,000 $ 3,325,000 $ - $ - $ 23,392,000 Issuance - - 1,700,000 1,460,000 - 3,160,000 Conversions ( 2,712,000 ) ( 17,355,000 ) ( 5,025,000 ) - - ( 25,092,000 ) Balance at December 31, 2021 - - - 1,460,000 - 1,460,000 Issuance - - - 875,000 752,500 1,627,500 Conversions - - - ( 1,260,000 ) - ( 1,260,000 ) Balance at December 31, 2022 $ - $ - $ - $ 1,075,000 $ 752,500 $ 1,827,500 F- 12 2021 Financing On August 13, 2021, the Board approved a Financing Term Sheet (the “2021 Term Sheet”), which set forth the terms under which the Company will use its best efforts to arrange for financing of a maximum of $ 5,000,000 (the “2021 Financing”), which amounts will be obtained in several tranches. Pursuant to the 2021 Term Sheet, the 2021 Notes will either be paid back, convert into shares of the Company’s Series D-1 Preferred Stock, or convert into Company equity securities and/or debt instruments of certain future financings on or before twelve months after the issue date of a 2021 Note, subject to certain exceptions. The 2021 Financing is in the form of unsecured convertible loans from the investors and evidenced by convertible promissory notes (individually, a “2021 Note” and collectively, the “2021 Notes”). In addition to customary provisions, the 2021 Notes will contain the following provisions: (i) The 2021 Notes bear interest at the rate of eight percent ( 8 % ) per annum on the outstanding principal amount of the loan that has been funded to the Company; (ii) In the event there is a change of control of the Board, the term of the 2021 Notes will be accelerated and all amounts due under the 2021 Notes may be immediately due and payable at the investors’ option; (iii) The outstanding principal amount and interest payment under the 2021 Notes may be paid back at maturity at the investors’ option; (iv) The outstanding principal amount and interest payable under the 2021 Notes are convertible at the investors’ option into shares of Series D-1 Preferred Stock at a price per share equal to $ 2.862 . The Series D-1 Preferred Stock is convertible into ten ( 10 ) shares of common stock; and (v) In the event the Company conducts a qualified equity or debt financing and the Company receives gross proceeds in the aggregate amount of $ 20 million, the 2021 Notes may be converted into the equity securities and/or debt instruments of such financing at the same terms as those investors. The embedded conversion options associated with the 2021 Notes do not require bifurcation and treatment as a derivative liability and they do not represent a beneficial conversion feature because the effective conversion price is not at a discount to the commitment date market price. On September 20, 2022, the Board approved the closure of the 2021 Financing. As of December 31, 2022, the Company had received 2021 Notes (defined above) aggregate proceeds of $ 2,335,000 , of which $ 525,000 is from related party investors (an officer and director of the Company). 2022 Financing On September 20, 2022, the Board approved a Financing Term Sheet (the “2022 Term Sheet”), which set forth the terms under which the Company will use its best efforts to arrange for financing of a maximum of $ 5,000,000 (the “2022 Financing”), which amounts will be obtained in several tranches. As of December 31, 2022, the Company had received proceeds of $ 752,500 from 2022 Notes, (defined below), of which $ 677,500 was from a related party investor (a Company director) in connection with the 2022 Financing. F- 13 Pursuant to the 2022 Term Sheet, the 2022 Notes (defined below) will convert into shares of the Company’s Series D-1 Preferred Stock twelve months after the issue date of a 2022 Note, subject to certain exceptions. The 2022 Financing will be in the form of an unsecured convertible loans from the investors (the “2022 Note Investors”) and evidenced by convertible promissory notes (individually, a “2022 Note” and collectively, the “2022 Notes”). In addition to customary provisions, the 2022 Notes will contain the following provisions: (i) The 2022 Notes will bear interest at the rate of eight percent ( 8 %) per annum on the outstanding principal amount of the Loan that has been funded to the Company; (ii) In the event there is a change of control of the Board, the term of the 2022 Notes will be accelerated and all amounts due under the 2022 Notes may be immediately due and payable at the 2022 Note Investors’ option; (iii) The outstanding principal amount and interest payable under the 2022 Notes may be convertible at the 2022 Note Investors’ option into shares of Series D-1 Preferred Stock at a price per share equal to $ 2.862 . The Series D-1 Preferred Stock is convertible into ten ( 10 ) shares of common stock; and (iv) The outstanding principal amount and interest payable under the 2022 Notes will be automatically convertible into shares of the Company’s Series D-1 Preferred Stock twelve (12) months after the issue date of a 2022 Note. The embedded conversion options associated with the 2022 Notes do not require bifurcation and treatment as a derivative liability and they do not represent a beneficial conversion feature because the effective conversion price is not at a discount to the commitment date market price. 2021 Conversions of 2017 and 2020 Notes into Preferred Stock The following summarizes the conversion activity during the year ended December 31, 2021: Schedule of Conversion of Notes into Preferred Stock 2021 Conversions Into Preferred Stock Series D Series D-1 2017 Notes Amended 2017 Notes 2020 Notes Total Principal converted $ 2,712,000 $ 17,355,000 $ 5,025,000 $ 25,092,000 Accrued interest converted 829,222 4,332,286 319,572 5,481,080 Total converted $ 3,541,222 $ 21,687,286 $ 5,344,572 $ 30,573,080 Conversion price $ 0.2862 $ 2.862 $ 2.862 Total shares 12,373,247 7,573,157 1,867,437 21,813,841 Any fractional shares issuable pursuant to the formula were rounded up to the next whole share of Series D and Series D-1 Preferred Shares. The 2017 Notes originally provided that they were convertible into a new series of preferred stock at a price per share equal to $ 0.2862 (the “Original Conversion Price”). In order to ensure that the Company had sufficient authorized shares of preferred stock into which the 2017 Notes would convert, yet keep the economic terms of the 2017 Notes substantially equivalent, on February 26, 2019, the Company entered into amendments (the “Amendments”) to the 2017 Notes (as amended, the “Amended 2017 Notes”) with a large majority of the holders of 2017 Notes to increase the conversion price by 10 times from $ 0.2862 to $ 2.862 (the “New Conversion Price”) and to change the conversion ratio by providing that one share of Preferred Stock would be convertible into 10 shares of common stock (the “New Conversion Ratio”). The impact of the Amendments was to reduce by 10 times the number of shares of preferred stock into which the 2017 Notes would convert, while keeping the economic terms the same. F- 14 The 2020 Notes had substantially similar terms to the Amended 2017 Notes, including being convertible into preferred stock at the New Conversion Price, with the Preferred Stock being convertible into Common Stock at the New Conversion Ratio. In order to (i) address the fact that a small minority of the holders of 2017 Notes did not execute the Amendments and (ii) ensure economic fairness for all of the holders of the 2017 Notes and 2020 Notes, on June 17, 2021, the Company designated two separate series of preferred stock into which the 2017 Notes and 2020 Notes would convert: (i) the Company’s Series D Convertible Preferred Stock, par value $ 0.001 per share was designated for the holders of 2017 Notes who did not execute the Amendments and (ii) the Company’s Series D-1 Preferred Stock, par value $ 0.001 per share was designated for issuance upon the conversion of Amended 2017 Notes, 2020 Notes, 2021 Notes, and 2022 Notes. On June 20, 2021, principal and interest in the aggregate amount of $ 3,541,222 , representing all of the outstanding non-amended 2017 Notes, was converted into 12,373,247 shares of Series D Convertible Preferred Stock at the Original Conversion Price of $ 0.2862 . Further on June 20, 2021, principal and interest in the aggregate amount of $ 27,031,858 , representing all of the outstanding Amended 2017 Notes and outstanding 2020 Notes was converted into 9,440,594 shares of Series D-1 Convertible Preferred Stock at the New Conversion Price of $ 2.862 . Any fractional shares issuable pursuant to the formula were rounded up to the next whole share of Series D and Series D-1 Preferred Shares. See Note 9, Stockholders’ Deficit for additional information on the Series D and Series D-1 Preferred Stock. As a result of the conversion of the 2017 Notes and 2020 Notes into convertible preferred stock, all the security interests of these Notes in the Company’s intellectual property were released. 2022 Conversions of 2021 Notes into Preferred Stock The following summarizes the conversion activity during the year ended December 31, 2022: Series D-1 Preferred Stock Principal converted $ 1,260,000 Accrued interest converted 101,640 Total converted $ 1,361,640 Conversion price $ 2.862 Total shares 475,766 During the year ended December 31, 2022, principal and interest in the aggregate amount of $ 1,361,640 , representing two 2021 Notes were converted into 475,766 shares of Series D-1 Preferred Stock at the Conversion Price of $ 2.862 . Any fractional shares issuable pursuant to the formula were rounded up to the next whole share of Series D-1 Preferred Shares. See Note 9, Stockholders’ Deficit for additional information on the Series D-1 Preferred Stock. 6. Notes Payable On April 20, 2020, the Company received a $ 62,500 loan under the CARES Act PPP (the “PPP Loan”). The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times certain of the borrower’s average monthly payroll expenses. On May 20, 2021, the Company applied for forgiveness of the PPP Loan. On June 2, 2021, the Company was awarded full forgiveness of the PPP Loan and accrued interest. During the year ended December 31, 2021, the Company recognized a gain on forgiveness of the PPP loan of $ 62,500 and interest of $ 594 . The Company obtained short-term financing from AFCO Insurance Premium Finance for our commercial insurance policies. As of December 31, 2022 and December 31, 2021, the balance of the note payable was $ 239,394 and $ 238,452 , respectively. F- 15 7. Related Party Transactions During the years ended December 31, 2022 and 2021, the Company paid Mr. Bruce Horowitz (Capital Strategists) consulting fees of $ 169,600 and $ 169,600 , respectively, for services rendered. Director fees for Mr. Horowitz for the year ending December 31, 2022 and 2021 were $ 75,000 and $ 75,000 , respectively. Accrued director fees for Mr. Horowitz as of December 31, 2022 and 2021 were $ 356,250 and $ 281,250 , respectively. Total amount owed to Capital Strategists as of December 31, 2022 and 2021 were $ 212,000 and $ 127,200 , respectively. Mr. Horowitz serves as both COO and a Director. See Note 5 and Note 8 for details of other related party transactions. Director fees during the years ended December 31, 2022 and 2021 were $ 385,000 and $ 385,000 , respectively. Accrued directors’ fees as of December 31, 2022 and 2021 were $ 1,945,589 and $ 1,560,589 , respectively. 8. Short-term Receivables Receivables at December 31, 2022 and 2021, include the Australian VAT tax credit and approximately $ 2,100,000 that is owed from Peter Culpepper, the former Interim Chief Executive Officer of the Company. The Company has established a reserve of approximately $ 2,100,000 as of December 31, 2022 and 2021, which represents the amount 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). 9. Stockholders’ Deficit Authorized Capital As of December 31, 2022, the Company was authorized to issue 1,000,000,000 shares of common stock, $ 0.001 par value, and 25,000,000 shares of preferred stock, $ 0.001 par value. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows: 12,374,000 shares to Series D Convertible Preferred Stock (the “Series D Preferred Stock”), and 11,241,000 shares of Series D-1 Convertible Preferred Stock (the “Series D-1 Preferred Stock”) and 1,385,000 shares undesignated. Series B Preferred Stock On August 25, 2016, the Company filed the Series B Certificate of Designation with the Delaware Secretary of State. The Series B Certificate of Designation provides for the issuance of the Series B Preferred Stock with a par value of $ 0.001 per share and a stated value of $ 25.00 per share. The Series B Preferred Stock has no voting rights. The holders of Series B Preferred Stock are entitled to receive cumulative dividends at the rate of 8 % per annum of the stated value per share, until the fifth anniversary of the date of issuance of the Series B Preferred Stock, at which time the Series B Preferred Stock automatically converts into common stock at the adjusted conversion price of $ 0.0533 . During the year ended December 31, 2021, 100 shares of outstanding Series B Preferred Stock automatically converted, at the fifth-year anniversary of their issuance, into 65,666 shares of common stock, which represents $ 3,500 ($ 2,500 of stated value plus $ 1,000 of cumulative dividends) divided by the adjusted conversion price. On March 30, 2022, the Company filed a Certificate of Elimination with the State of Delaware eliminating the Series B Preferred Stock. Series D and Series D-1 Preferred Stock The rights, preferences and privileges of the Series D Preferred Stock and Series D-1 Preferred Stock (collectively, the “D-Series Preferred Stock”) are set forth in their respective Certificates of Designation. The Board of Directors of the Company approved each of the Certificates of Designation on June 14, 2021, and each Certificate of Designation was filed with the Delaware Secretary of State on June 17, 2021. The Series D Certificate of Designation established and designated 12,374,000 shares of Series D Preferred Stock. The Series D-1 Certificate of Designation was established and initially designated 9,441,000 shares of Series D-1 Preferred Stock. On June 20, 2021, the Company issued 12,373,247 shares of Series D Preferred Stock upon the conversion of all of the outstanding 2017 Notes at the Original Conversion Price of $ 0.2862 and issued 9,440,594 shares of Series D-1 Preferred Stock upon the conversion of all outstanding Amended 2017 Notes and 2020 Notes at the New Conversion Price of $ 2.862 . See Note 5, Convertible Notes Payable for additional information on the conversion. F- 16 During the year ended December 31, 2021, a holder of 222,145 shares of Series D-1 Preferred Stock voluntarily converted the Preferred Stock into 2,221,450 shares of common stock. On March 30, 2022, the Company amended the Certificate of Designation filed with the Delaware Secretary of State to increase the authorized shares of Series D-1 Preferred Stock to 11,241,000 shares. During the year ended December 31, 2021, the Company received consideration of $ 150,000 from an investor in exchange for an aggregate of 52,411 shares of restricted Series D-1 Preferred Stock that were issued during the first quarter of 2022. During the fourth quarter of 2022, the Company issued 475,766 shares of Series D-1 Preferred Stock upon the automatic conversion of $ 1,260,000 of principal and $ 101,640 accrued interest outstanding on the 2021 Notes. Rank The Series D Preferred Stock and the Series D-1 Preferred Stock rank pari passu with each other. The D-Series Preferred Stock rank senior to the Common Stock and any other class or series of the Company’s capital stock, the terms of which do not provide that shares of such class rank senior to, or pari passu with, the D-Series Preferred as to dividends and distributions upon a change of control transaction, or the liquidation, winding-up and dissolution of the Company. Dividends The D-Series Preferred Stock does not have any dividend preference but are entitled to receive, on a pari passu basis, dividends, if any, that are declared and paid on the common stock and any other class of the Company’s capital stock that ranks junior or on par to the D-Series Preferred Stock. Liquidation Preference Upon the occurrence of the liquidation, winding-up or dissolution of the Company or certain mergers, corporate reorganizations or sales of the Company’s assets (each, a “Company Event”), holders of D-Series Preferred Stock will be entitled to receive a liquidation preference before any distributions are made to holders of any other class or series of the Company’s capital stock junior to the D-Series Preferred Stock. If a Company Event occurs within two years of June 20, 2021 (the “Date of Issuance”), the holders of D-Series Preferred Stock will receive, for each share of D-Series Preferred Stock, an amount in cash equal to the Original Issue Price (as defined in the respective Certificates of Designation) multiplied by four. If a Company Event occurs from and after the second anniversary of the Date of Issuance, the holders of D-Series Preferred Stock will receive, for each share of D-Series Preferred Stock, an amount in cash equal to the Original Issue Price multiplied by six. The Original Issue Price for the Series D Preferred Stock is $ 0.2862 , and the Original Issue Price for the Series D-1 Preferred Stock is $ 2.862 . Voting Rights Holders of shares of D-Series Preferred Stock will vote together with the holders of common stock as a single class. Each share of Series D Preferred Stock carries the right to one vote per share. Each share of Series D-1 Preferred Stock carries the right to ten votes per share. The Company is not permitted to amend, alter or repeal its Certificate of Incorporation or Bylaws in a manner adverse to the relative rights, preferences, qualifications, limitations or restrictions of the D-Series Preferred Stock without the affirmative vote of a majority of the votes entitled to be cast by holders of outstanding shares of D-Series Preferred Stock, voting together as a single class with each share of D-Series Convertible Preferred Stock having a number of votes equal to the number of shares of common stock then issuable upon conversion of such share of D-Series Preferred Stock. Conversion The Series D Preferred Stock is convertible at the option of the holders thereof into shares of common stock based on a one-for-one conversion ratio. The Series D-1 Preferred Stock is convertible at the option of the holders thereof into shares of common stock based on a one-for-ten conversion ratio. The conversion ratio of the D-Series Preferred Stock is subject to adjustment for stock splits and combinations, recapitalizations, reclassifications, reorganizations, mergers, and consolidations. The D-Series Preferred Stock will automatically convert into shares of common stock upon the fifth anniversary of the date of issuance. F- 17 Common Stock Issuances During the year ended December 31, 2021, the Company issued an aggregate of 300,000 shares of immediately vested restricted common stock with a grant date fair value of $ 23,199 for services. During the year ended December 31, 2021, the Company issued 2,221,450 shares of common stock upon the voluntary conversion of Series D-1 Preferred Stock. During the year ended December 31, 2021, the Company issued 65,666 shares of common stock upon automatic conversion of Series B Preferred Stock. During the year ended December 31, 2022, the Company issued an aggregate of 50,000 shares of immediately vested restricted common stock with a grant date fair value of $ 3,025 for services. 10. Stock Incentive Plan and Warrants The 2017 Amendment and Restatement of the Provectus Biopharmaceuticals, Inc. 2014 Equity Compensation Plan (the “2017 Equity Compensation Plan”) provides for the issuance of up to 20,000,000 shares of common stock pursuant to stock options for the benefit of eligible employees and directors of the Company. Options granted under the 2017 Equity Compensation Plan are either “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code or options which are not incentive stock options. The stock options are exercised over a period determined by the Board of Directors (through its Compensation Committee), but generally no longer than 10 years after the date they are granted. As of December 31, 2022, there were 16,587,500 shares available for issuance under the 2017 Equity Compensation Plan. There were no stock options granted during the years ended December 31, 2022 and 2021. The following table summarizes option activity during the year ended December 31, 2022 and 2021: Schedule of Option Activity Weighted Average Shares Exercise Price Outstanding and exercisable at January 1, 2021 4,800,000 $ 0.46 Forfeited ( 1,175,000 ) 0.89 Outstanding and exercisable at December 31, 2021 3,625,000 $ 0.32 Forfeited ( 200,000 ) 0.86 Outstanding and exercisable at December 31, 2022 3,425,000 $ 0.29 As of December 31, 2022, the intrinsic value of outstanding and exercisable options was $ 0 . F- 18 The following table summarizes information about stock options outstanding at December 31, 2022: Schedule of Stock Options Outstanding Options Outstanding Options Exercisable Outstanding Weighted Average Exercisable Number of Remaining Life Number of Exercise Price Options In Years Options $ 0.12 2,425,000 2.90 2,425,000 $ 0.29 100,000 2.90 100,000 $ 0.67 200,000 0.60 200,000 $ 0.75 550,000 2.90 550,000 $ 0.88 150,000 1.60 150,000 3,425,000 2.75 3,425,000 Warrants During the year ended December 31, 2022, the Company did not issue any warrants. On August 30, 2021, a total of 68,723,698 of August 2016 warrants expired. During the year ended December 31, 2021, holders of warrants exercised warrants to purchase 18,052,966 shares of common stock at a price of $ 0.053 per share. In connection with the exercises, the Company received cash proceeds of $ 962,223 and issued 18,052,966 shares of common stock. During the year ended December 31, 2021, the Company issued 25,000 three-year immediately vested warrants to an advisory board member to purchase an aggregate of 25,000 shares of common stock with exercise price of $ 0.28620 per share. The warrants had an aggregate grant date fair value of $ 488 , which was recognized immediately within stock compensation in general and administrative expenses. In applying the Black-Scholes option pricing model to warrants granted, the Company used the following assumptions: Schedule of Assumption of Warrants For the Years Ended December 31, 2022 2021 Contractual terms (years) n/a 3.00 Expected volatility n/a 92 % Risk-free interest rate n/a 0.35 % Expected dividend n/a 0.00 % The following table summarizes warrant activity during the year ended December 31, 2022 and 2021: Schedule of Warrant Activity Number of Weighted Average Warrants Exercise Price Outstanding and exercisable at January 1, 2021 87,264,164 $ 0.02 Granted 25,000 0.29 Exercised ( 18,052,966 ) 0.05 Forfeited ( 68,723,698 ) 0.05 Outstanding and exercisable at December 31, 2021 512,500 $ 0.92 Forfeited ( 37,500 ) 0.29 Outstanding and exercisable at December 31, 2022 475,000 $ 0.97 As of December 31, 2022, the intrinsic value of outstanding and exercisable warrants was $ 0 . F- 19 The following table summarizes information about warrants outstanding at December 31, 2022: Schedule of Warrants Outstanding Warrants Outstanding Warrants Exercisable Outstanding Weighted Average Exercisable Number of Remaining Life Number of Exercise Price Warrant In Years Warrants $ 0.290 87,500 0.85 87,500 $ 1.00 18,000 1.39 18,000 $ 1.12 366,000 1.39 366,000 $ 2.00 3,500 1.39 3,500 475,000 1.29 475,000 Holders of the outstanding warrants are not entitled to vote and the exercise prices of such warrants are subject to customary anti-dilution provisions. 11. Income Taxes The domestic and foreign components of loss before income taxes from operations for the years ended December 31, 2022 and 2021 are as follows: Schedule of Domestic and Foreign Loss Before Income Taxes Years ended December 31 2022 2021 Domestic $ ( 3,550,182 ) $ ( 5,454,489 ) Foreign ( 4,501 ) ( 85,053 ) Net Pre-Tax Loss $ ( 3,554,683 ) $ ( 5,539,542 ) The income tax provision (benefit) consists of the following: Schedule of Income Tax Provision (Benefit) Years ended December 31 2022 2021 Federal: Current $ - $ - Deferred 21.00 % 538,915 295,524 State: Current - - Deferred 5.14 % 131,778 72,262 26.14 % 670,693 367,786 Change in valuation allowance ( 670,693 ) ( 367,786 ) Income tax provision (benefit) $ - $ - The reconciliations between the statutory federal income tax rate and the Company’s effective tax rate are as follows: Schedule of Statutory Federal Income Tax Rate and Effective Tax Rate Years Ended December 31 2022 2021 Tax benefit at federal statutory rate ( 21.0 )% ( 21.0 )% State income taxes, net of federal benefit ( 5.1 )% ( 5.1 )% Permanent differences ( 3.7 )% ( 0.9 )% Change in valuation allowance ( 18.6 )% ( 7.2 )% Prior year true-up 2.3 % 2.4 % Expiration of federal and state net operating loss carryforwards 49.1 % 6.8 % Expiration of warrants and options 1.0 % 3.6 % Conversion of accrued interest to preferred stock 0.00 % 21.4 % Miscellaneous ( 0.7 )% 0.0 % Effective income tax rate 0.0 % 0.0 % F- 20 The components of the Company’s deferred income taxes are summarized below: Schedule of Components of Deferred Income Taxes December 31 2022 2021 Deferred Tax Assets: Net operating loss carryforwards $ 42,012,057 $ 43,453,746 Research and development credit carryovers 3,229,869 3,049,608 Stock-based compensation 152,813 186,772 Intangible assets 337,558 227,397 Capitalized R&D expenditures 358,897 - Contribution carryovers 10,062 10,062 Accrued liabilities 628,265 505,038 Gross deferred tax assets 46,729,521 47,432,623 Deferred Tax Liabilities: Depreciation ( 3,915 ) - Prepaid expenses ( 86,459 ) ( 82,179 ) Other - ( 40,604 ) Gross deferred tax liabilities ( 90,374 ) ( 122,783 ) Valuation allowance ( 46,639,147 ) ( 47,309,840 ) Deferred tax asset, net of valuation allowance $ - $ - Change in valuation allowance $ 670,693 $ 367,786 A valuation allowance against deferred tax assets is required if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets may not be realized. The Company is in the early stages of development and realization of the deferred tax assets is not considered more likely than not. As a result, the Company has recorded a full valuation allowance for the net deferred tax asset. Since inception of the Company on January 17, 2002, the Company has generated federal, state, and Australian tax net operating losses of approximately $ 165 million, $ 141 million, and $ 143 thousand, respectively. Under the Tax Cuts and Jobs Act, federal net operating losses incurred after December 31, 2017 may be carried forward indefinitely. The tax loss carryforwards of the Company may be subject to limitation by Section 382 of the Internal Revenue Code with respect to the amount utilizable each year. This limitation could reduce the Company’s ability to utilize net operating loss carryforwards. Federal net operating losses (“NOLs”) totaling $ 145.6 million expire in various amounts between 2023 and 2037. Federal NOLS totaling $ 19.9 million do not expire. Schedule of Net Operating Loss Year Year of Generated Expiration Amount 2003 2023 $ 1,520,649 2004 2024 3,571,227 2005 2025 5,530,815 2006 2026 7,192,407 2007 2027 10,218,952 2008 2028 7,017,372 2009 2029 9,573,948 2010 2030 10,344,298 2011 2031 11,225,047 2012 2032 11,193,882 2013 2033 10,273,181 2014 2034 9,075,738 2015 2035 17,455,417 2016 2036 19,710,699 2017 2037 11,703,175 2018 N/A 6,255,067 2019 N/A 4,085,063 2020 N/A 4,167,397 2021 N/A 3,167,687 2022 N/A 2,207,092 Total NOLS $ 165,489,113 F- 21 State NOLS totaling $ 140.7 million expire in various years between 2023 and 2037. Year Year of Generated Expiration Amount 2008 2023 $ 7,106,425 2009 2024 9,680,770 2010 2025 10,440,651 2011 2026 11,362,120 2012 2027 11,311,394 2013 2028 10,381,763 2014 2029 9,278,510 2015 2030 18,547,287 2016 2031 20,166,661 2017 2032 12,131,850 2018 2033 6,455,113 2019 2034 4,211,210 2020 2035 4,234,755 2021 2036 3,232,081 2022 2037 2,207,092 Total NOLS $ 140,747,682 Australia NOLS totaling $ 143,370 do not expire. Year Generated Year of Expiration Amount 2017 N/A $ 861 2018 N/A 54,101 2019 N/A 13,843 2020 N/A 13,384 2021 2022 N/A N/A 56,351 4,830 Total NOLS $ 143,370 The Company has determined that there are no uncertain tax positions as of December 31, 2022 or 2021. F- 22 We file income tax returns in the U.S., Tennessee, and Australia. As of December 31, 2022, the U.S. federal and Tennessee tax years open to examination are 2019 through 2022. The Australia income tax return remains open to examination for 2020 through 2022. To date, the Company’s operations conducted by its Australian subsidiary consist primarily of research and development activities. As of December 31, 2022, there were no accumulated earnings and profits in the Company’s foreign subsidiary. At current tax rates, no additional federal income taxes (net of available tax attributes) would be payable if such earnings were to be repatriated. 12. Leases Leases The Company leased 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 were approximately $ 6,100 per month due to the Company negotiating a continued reduced rent from January 1, 2022 through June 30, 2022. On June 30, 2022, the lease expired and was not renewed. On June 18, 2022, the Company moved into 2,700 square feet of leased corporate office space in Knoxville, Tennessee through an operating lease agreement for a term of three years ending June 30, 2025. The monthly base rent ranges from $ 4,053 to $ 4,278 over the term on the lease. Total expense for operating leases for the year ended December 31, 2022 was $ 63,066 , of which, $ 42,044 was included within research and development and $ 21,022 was included within general and administrative expenses on the consolidated statements of operations. Total expense for operating leases for the year ended December 31, 2021 was $ 86,545 , of which, $ 57,697 was included within research and development and $ 28,848 was included within general and administrative expenses on the consolidated statements of operations. As of December 31, 2022, the Company had no leases that were classified as a financing lease. As of December 31, 2022, 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: Schedule of Right-of-use Assets and Liabilities For The Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 62,944 $ 82,678 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 130,422 $ - Weighted Average Remaining Lease Term Operating leases 2.50 Years 0.50 Years Weighted Average Discount Rate Operating leases 5.0 % - 8.0 % 8.0 % F- 23 Future minimum payments under the non-cancellable lease as of December 31, 2022 were as follows: Schedule of Future Minimum Payments Under Non-cancellable Lease Years Amount 2023 $ 49,311 2024 50,663 2025 25,669 Total future minimum lease payments 125,643 Less: amount representing imputed interest ( 7,845 ) Total $ 117,798 13. 401(K) Profit Sharing Plan The Company maintains a retirement plan under Section 401(k) of the Internal Revenue Code, which covers all eligible employees. All employees with U.S. source income are eligible to participate in the plan immediately upon employment. There was no contribution made by the Company in 2022 or 2021. 14. Grants On October 25, 2021, the Company received a grant award of $ 2,500,000 from the State of Tennessee for the study of animal cancers and dermatological disorders for the period October 15, 2021 to June 30, 2022 (the “Tennessee Grant” or “Grant”). The Tennessee Grant was pre-funded; therefore, the funds do not need to be used in full by June 30, 2022. The Tennessee Grant was provided as reimbursement of research and development expenses related to the development of animal health drug products. The Company has elected gross presentation of the Tennessee Grant income earned and the related research and development expenses with Grant income presented as Grant revenue in the period in which it is earned, and qualifying costs presented as research and development expenses included in the Company’s statement of operations, in the period that such costs are incurred. As of December 31, 2022, $ 1,510,958 has been recorded as unearned Grant revenue liability on the accompanying audited consolidated balance sheets. The Company recorded $ 989,042 and $ 0 of Grant revenue during the years ended December 31, 2022 and 2021, respectively. 15. License Transactions In the third quarter of 2019, the Company entered into a dialog with Bascom Palmer Eye Institute (“BPEI”) regarding collaboration on BPEI’s ophthalmic photodynamic antimicrobial therapy (“PDAT”) using the Company’s pharmaceutical-grade RBS. On February 16, 2022, and later amended on May 11, 2022, the Company entered into an option agreement with the University of Miami (“UM”) for an exclusive worldwide license of intellectual property (“IP”) developed by the Ophthalmic Biophysics Center (“OBC”) of BPEI that included the use of OBC’s PDAT medical device in combination with formulations of the Company’s pharmaceutical-grade RBS for the treatment of bacterial, fungal, and viral infections of the eye. The Company completed the arrangements of this collaboration during the third quarter of 2022, whereby the Company paid $5,000 for the option that expires on May 31, 2023; agreed to pay up to $10,000 of new UM patent expenses for this IP during the period of the option and up to $25,000 of past UM patent expenses for this IP; and entered into a sponsored research agreement with UM on September 16, 2022 to study the combination of OBC’s PDAT and TOP PV-305, a formulation of the Company’s pharmaceutical-grade RBS, for the treatment of infectious keratitis. 16. Commitments, Contingencies and Litigation The Company may, from time to time, be involved in litigation arising in the ordinary course of business or which may be expected to be covered by insurance. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. 17. Subsequent Events The Company has evaluated events that have occurred after the balance sheet date and through the date the financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed below. Convertible Notes Payable Subsequent to December 31, 2022, the Company entered into a 2022 Note with a related party investor (a Company Director) in the aggregate principal amount of $ 600,000 . Preferred Stock Subsequent to December 31, 2022, the Company issued an aggregate of 18,872 shares of Series D-1 Convertible Preferred Stock upon automatic conversion of a 2021 Note. F- 24 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable.