PROVECTUS BIOPHARMACEUTICALS, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS. PROVECTUS BIOPHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2024 2023 (Unaudited) Assets Current Assets: Cash $ 18,035 $ 76,576 Restricted cash 744,717 950,223 Short-term receivables 98 476 Prepaid expenses and other current assets 245,954 337,522 Total Current Assets 1,008,804 1,364,797 Equipment and furnishings, less accumulated depreciation of $ 113,224 and $ 110,994 , respectively 9,789 12,020 Operating lease right-of-use asset 60,398 72,026 Total Assets $ 1,078,991 $ 1,448,843 Liabilities and Stockholders’ Deficit Current Liabilities: Accounts payable $ 1,369,957 $ 1,675,891 Unearned grant revenue 715,176 953,248 Other accrued expenses 3,096,272 3,240,436 Accrued interest 40,660 22,600 Accrued interest - related parties 110,914 123,828 Notes payable 190,910 277,815 Convertible notes payable 953,000 800,000 Convertible notes payable - related parties 1,990,000 1,875,000 Operating lease liability, current portion 49,020 48,077 Total Current Liabilities 8,515,909 9,016,895 Operating lease liability, non-current portion 12,729 25,299 Total Liabilities 8,528,638 9,042,194 Commitments, contingencies, and litigations (Note 12) - 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 March 31, 2024 and December 31, 2023; aggregate liquidation preference of $ 14,164,889 at March 31, 2024 and December 31, 2023 12,373 12,373 Series D-1 Convertible Preferred Stock; 11,241,000 shares designated; 10,587,571 and 10,361,097 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively; aggregate liquidation preference of $ 121,205,780 and $ 118,613,136 at March 31, 2024 and December 31, 2023, respectively 10,587 10,361 Preferred stock, value 10,587 10,361 Common stock; par value $ 0.001 per share; 1,000,000,000 shares authorized; 419,522,119 shares issued and outstanding at March 31, 2024 and December 31, 2023 419,522 419,522 Additional paid-in capital 245,362,902 244,714,967 Accumulated other comprehensive loss ( 60,580 ) ( 60,165 ) Accumulated deficit ( 253,194,451 ) ( 252,690,409 ) Total Stockholders’ Deficit ( 7,449,647 ) ( 7,593,351 ) Total Liabilities and Stockholders’ Deficit $ 1,078,991 $ 1,448,843 See accompanying notes to condensed consolidated financial statements. 2 PROVECTUS BIOPHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended March 31, 2024 2023 Grant Revenue $ 238,072 $ 205,025 Operating Expenses: Research and development 555,535 548,393 General and administrative 129,802 438,845 Total Operating Expenses 685,337 987,238 Total Operating Loss ( 447,265 ) ( 782,213 ) Other Expense: Interest expense ( 56,777 ) ( 45,241 ) Total Other Expense ( 56,777 ) ( 45,241 ) Net Loss $ ( 504,042 ) $ ( 827,454 ) Basic and Diluted Loss Per Common Share $ ( 0.00 ) $ ( 0.00 ) Weighted Average Number of Common Shares Outstanding - Basic and Diluted 419,522,119 419,497,119 See accompanying notes to condensed consolidated financial statements. 3 PROVECTUS BIOPHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) 2024 2023 For the Three Months Ended March 31, 2024 2023 Net Loss $ ( 504,042 ) $ ( 827,454 ) Other Comprehensive (Loss)/Income: Foreign currency translation adjustments ( 415 ) 191 Total Comprehensive Loss $ ( 504,457 ) $ ( 827,263 ) See accompanying notes to condensed consolidated financial statements. 4 PROVECTUS BIOPHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, 2024 Shares Amount Shares Amount Shares Amount Capital Loss Deficit Total Preferred Stock Series D Preferred Stock Series D-1 Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Shares Amount Shares Amount Shares Amount Capital Loss Deficit Total Balance at January 1, 2024 12,373,247 $ 12,373 10,361,097 $ 10,361 419,522,119 $ 419,522 $ 244,714,967 $ ( 60,165 ) $ ( 252,690,409 ) $ ( 7,593,351 ) Conversion of 2022 Note to Series D-1 Preferred Stock - - 226,474 226 - - 647,935 - - 648,161 Comprehensive loss: Net loss - - - - - - - - ( 504,042 ) ( 504,042 ) Other comprehensive loss - - - - - - - ( 415 ) - ( 415 ) Balance at March 31, 2024 12,373,247 $ 12,373 10,587,571 $ 10,587 419,522,119 $ 419,522 $ 245,362,902 $ ( 60,580 ) $ ( 253,194,451 ) $ ( 7,449,647 ) FOR THE THREE MONTHS ENDED MARCH 31, 2023 Preferred Stock Series D Preferred Stock Series D-1 Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Shares Amount Shares Amount Shares Amount Capital Loss Deficit Total Balance at January 1, 2023 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 ) Conversion of 2021 Note to Series D-1 Preferred Stock - - 18,872 18 - - 53,992 - - 54,010 Conversion of Note to Series D-1 Preferred Stock - - 18,872 18 - - 53,992 - - 54,010 Comprehensive loss: Net loss - - - - - - - - ( 827,454 ) ( 827,454 ) Other comprehensive income - - - - - - - 191 - 191 Balance at March 31, 2023 12,373,247 $ 12,373 9,765,498 $ 9,765 419,497,119 $ 419,497 $ 243,008,185 $ ( 35,488 ) $ ( 250,416,095 ) $ ( 7,001,763 ) Balance 12,373,247 $ 12,373 9,765,498 $ 9,765 419,497,119 $ 419,497 $ 243,008,185 $ ( 35,488 ) $ ( 250,416,095 ) $ ( 7,001,763 ) See accompanying notes to condensed consolidated financial statements. 5 PROVECTUS BIOPHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 2024 2023 For the Three Months Ended March 31, 2024 2023 Cash Flows From Operating Activities: Net loss $ ( 504,042 ) $ ( 827,454 ) Adjustments to reconcile net loss to net cash used in operating activities: Non-cash lease expense 11,628 11,069 Depreciation 2,231 2,230 Changes in operating assets and liabilities Short term receivables 365 ( 393 ) Prepaid expenses and other current assets 91,568 195,392 Accounts payable ( 305,736 ) ( 186,280 ) Unearned grant revenue ( 238,072 ) ( 205,025 ) Other accrued expenses ( 144,118 ) 354,252 Operating lease liability ( 11,627 ) ( 10,730 ) Accrued interest 53,308 42,829 Net Cash Used In Operating Activities ( 1,044,495 ) ( 624,110 ) Cash Flows From Financing Activities: Proceeds from issuance of convertible notes payable 153,000 - Proceeds from issuance of convertible notes payable - related parties 815,000 600,000 Repayment of short-term note payable ( 86,905 ) ( 84,297 ) Repayment of 2021 convertible note payable - related party ( 100,000 ) - Net Cash Provided By Financing Activities 781,095 515,703 Effect of exchange rates on cash and restricted cash ( 647 ) ( 1,845 ) Net Decrease In Cash and Restricted Cash ( 264,047 ) ( 110,252 ) Cash and Restricted Cash, Beginning of Period 1,026,799 1,431,707 Cash and Restricted Cash, End of Period $ 762,752 $ 1,321,455 Cash and restricted cash consisted of the following: Cash $ 18,035 $ 34,153 Restricted cash 744,717 1,287,302 Cash and Restricted Cash, End of Period $ 762,752 $ 1,321,455 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - Non-cash investing and financing activities: Conversion of 2021 Notes and related accrued interest to Series D-1 Preferred Stock $ - $ 54,010 Conversion of 2022 Notes and related accrued interest to Series D-1 Preferred Stock $ 648,161 $ - See accompanying notes to condensed consolidated financial statements. 6 PROVECTUS BIOPHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Business Organization, Nature of Operations and Basis of Presentation Provectus Biopharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, “Provectus” or “the Company”), is a clinical-stage biotechnology company developing immunotherapy medicines for different diseases that are based on a class of synthetic small molecule immuno-catalysts called halogenated xanthenes (“HXs”). Our lead HX molecule is named rose bengal sodium (“RBS”). The Company’s proprietary, patented, pharmaceutical-grade RBS is the active pharmaceutical ingredient in the drug candidates of our current clinical development programs and the preclinical formulations of our current non-clinical early discovery programs. Importantly, our pharmaceutical-grade RBS displays different therapeutic effects at different concentrations and can be formulated for delivery by different routes of administration. The Company believes that RBS targets disease in a bifunctional 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. Second, 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 at ClinicalTrials.gov. The Company believes that it is the first and only entity to date to make pharmaceutical-grade RBS successfully, reproducibly, and consistently at a purity of nearly 100%. The Company’s small molecule HX medical science platform comprises several different drug candidates and preclinical targets using different concentrations delivered by different routes of administration specific to each disease area and/or disease indication. The Company’s HX medical science platform includes clinical development programs in oncology (intratumoral administration), dermatology (topical), and ophthalmology (topical); in vivo proof-of-concept programs in oncology (oral), hematology (oral), wound healing (topical), and canine cancers (intratumoral); and 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. 7 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 (“GAAP”) for interim financial information pursuant to Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be reviewed in conjunction with the Company’s audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2023 filed with the SEC on March 28, 2024. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. 2. Liquidity and Going Concern To date, the Company has not generated any revenues or profits from planned principal operations. The Company’s cash and restricted cash were $ 762,752 at March 31, 2024 which includes $ 744,717 of restricted cash resulting from a grant received from the State of Tennessee. The Company’s working capital deficit was $ 7,507,105 and $ 7,652,098 as of March 31, 2024 and December 31, 2023, respectively, net loss for the three months ended March 31, 2024 and 2023 was $ 504,042 and $ 827,454 , respectively, and cash used in operations was $ 1,044,495 and $ 624,110 for the three months ended March 31, 2024 and March 31, 2023, respectively. 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 unaudited condensed 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 (see 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 offerings, although there can be no assurance that it will continue to be successful in the future. If the Company is unable to raise sufficient capital, it will not be able to pay its obligations as they become due. The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, there can be no assurance 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 2024 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, there can be no assurance that it will be able to obtain funds on commercially acceptable terms, or complete additional financing in a timely manner. Any such financing may result in significant dilution to stockholders. These factors raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of liabilities that may be necessary should we be unable to continue as a going concern. Our consolidated financial statements included elsewhere in this Annual Report on Form 10-K have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values. 8 3. Significant Accounting Policies Since the date the Company’s December 31, 2023 consolidated financial statements were issued in its 2023 Annual Report on March 28, 2024, there have been no material changes to the Company’s 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, accrued liabilities, and the valuation allowance related to the Company’s deferred tax assets. Restricted Cash Restricted cash consists of a grant award received from the State of Tennessee. Restricted cash available as of March 31, 2024 is $ 744,717 . See Note 10, Grants. Cash Concentrations Cash and restricted cash are maintained at financial institutions and, at times, balances may exceed federally insured limits of $ 250,000 , although the Company seeks to minimize this through treasury management. The Company has never experienced any losses related to these balances although there can be no assurance that it will not experience any losses in the future. As of March 31, 2024 and December 31, 2023, the Company had cash and restricted cash balances in excess of FDIC insurance limits of $ 512,752 and $ 776,799 , respectively. 9 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 2024 2023 March 31, 2024 2023 Warrants 412,500 475,000 Options 3,225,000 3,425,000 Convertible preferred stock 118,248,957 110,028,227 2021 unsecured convertible notes 494,041 3,860,043 2022 unsecured convertible notes 10,318,590 4,833,714 Total potentially dilutive shares 132,699,088 122,621,984 Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” These amendments require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reporting segment are required to provide both the new disclosures and all of the existing disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023 , and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for the Company for annual periods beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption to have any material effects on its financial condition, results of operation or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-09. 4. Other Accrued Expenses The following table summarizes the other accrued expenses at March 31, 2024 and December 31, 2023: Schedule of Other Accrued Expenses 2024 2023 March 31, December 31, 2024 2023 Accrued payroll and taxes $ 827,432 $ 719,460 Accrued vacation 100,651 92,985 Accrued directors’ fees 1,976,839 2,330,589 Accrued other expenses 191,350 97,402 Total other accrued expenses $ 3,096,272 $ 3,240,436 10 5. Convertible Notes Payable The following summarizes convertible notes payable activity during the three months ended March 31, 2024: 2021 Financing Schedule of Convertible Notes Payable Non-Related Party Face Amount Related Party Face Amount Total Balance as of January 1, 2024 $ - $ 200,000 $ 200,000 Repayment - ( 100,000 ) ( 100,000 ) Balance as of March 31, 2024 $ - $ 100,000 $ 100,000 2022 Financing Non-Related Party Face Amount Related Party Face Amount Total Balance as of January 1, 2024 $ 800,000 $ 1,675,000 $ 2,475,000 Issued 153,000 815,000 968,000 Conversion - ( 600,000 ) ( 600,000 ) Balance as of March 31, 2024 $ 953,000 $ 1,890,000 $ 2,843,000 For further details on the terms of the 2021 and 2022 Notes, refer to our Form 10-K as filed with the SEC on March 28, 2024. 11 2024 Repayment of 2021 Notes During the three months ended March 31, 2024, the Company repaid $ 100,000 principal owed on the 2021 Note. As of March 31, 2024, principal and interest in the amount of $ 100,000 and $ 41,394 , respectively, remains outstanding on the 2021 Note. 2024 Conversions of 2022 Notes into Preferred Stock During the three months ended March 31, 2024, principal and interest in the aggregate amount of $ 648,161 , owed in connection with the 2022 Notes were converted into 226,474 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 Stock. See Note 8, Stockholders’ Deficit for additional information on the Series D-1 Preferred Stock. 6. Notes Payable The Company obtained short-term financing from AFCO Insurance Premium Finance for our commercial insurance policies. As of March 31, 2024 and December 31, 2023, the balance of the note payable was $ 190,910 and $ 277,815 , respectively. 7. Related Party Transactions During each of the three months ended March 31, 2024 and 2023, the Company had consulting fees of $ 63,600 to Mr. Bruce Horowitz (Capital Strategists) for services rendered. As of March 25, 2024, Mr. Horowitz resigned as COO and member of the Board. On March 26, 2024, the Company paid Mr. Horowitz $ 250,000 with a balance of $ 258,000 due on or before June 30, 2024 , after which the amount of the second payment would be increased to $ 500,000 . Mr. Horowitz waived the amount of $ 469,000 due him in director fees. See Note 5 for details of other related party transactions. Director fees incurred during each of the three months ended March 31, 2024 and 2023 were $ 96,250 . Accrued directors’ fees as of March 31, 2024 and December 31, 2023 were $ 1,976,839 and $ 2,330,589 , respectively. 8. Stockholders’ Deficit Preferred Stock During the three months ended March 31, 2024, the Company issued 226,474 shares of Series D-1 Convertible Preferred Stock upon the conversion of $ 600,000 of principal and $ 48,161 accrued interest outstanding on the 2022 Notes. Options During the three months ended March 31, 2024 and 2023, the Company did not have any issuances, grants, or exercises of options. The following table summarizes option activities during the three months ended March 31, 2024: Schedule of Option Activity Shares Weighted Average Exercise Price Weighted Average Remaining Life in Years Aggregate Intrinsic Value Outstanding and exercisable at January 1, 2024 3,225,000 $ 0.27 $ - Forfeited - - Outstanding and exercisable at March 31, 2024 3,225,000 $ 0.27 1.62 $ - 12 The following table summarizes information about options outstanding and exercisable at March 31, 2024: Summary of Stock Options Outstanding Exercise Price Outstanding and Exercisable Weighted Average Remaining Contractual Life Intrinsic Value $ 0.12 2,425,000 1.60 $ 152,775 $ 0.29 100,000 1.60 $ - $ 0.75 550,000 1.70 $ - $ 0.88 150,000 0.30 $ - 3,225,000 1.62 $ 152,775 Warrants During the three months ended March 31, 2024 and 2023, the Company did not have any issuances, grants, or exercises of warrants. The following table summarizes warrant activities during the nine months ended March 31, 2024: Schedule of Warrant Activity Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life in Years Aggregate Intrinsic Value Outstanding and exercisable at January 1, 2024 412,500 $ 1.07 Forfeited - - Outstanding and exercisable at March 31, 2024 412,500 $ 1.07 0.13 $ - The following table summarizes information about warrants outstanding and exercisable at March 31, 2024: Summary of Warrants Outstanding Exercise Price Outstanding and Exercisable Weighted Average Remaining Contractual Life Intrinsic Value $ 0.29 25,000 0.01 $ - $ 1.00 18,000 0.14 $ - $ 1.12 366,000 0.14 $ - $ 2.00 3,500 0.14 $ - 412,500 0.13 $ - Holders of the outstanding warrants are not entitled to vote and the exercise prices of such warrants are subject to customary anti-dilution provisions. 13 9. Leases On June 18, 2022, the Company leased 2,700 square feet of corporate office space in Knoxville, Tennessee through an operating lease agreement for a term of three years ending on June 30, 2025. The monthly base rent ranges from $ 4,053 to $ 4,278 over the term of the lease. Total operating lease expense for the three months ended March 31, 2024 was $ 12,842 , of which $ 8,561 was included within research and development and $ 4,281 was included within general and administrative expenses on the condensed consolidated statements of operations. Total operating lease expense for the three months ended March 31, 2023 was $ 13,507 of which $ 9,005 was included within research and development and $ 4,502 was included within general and administrative expenses on the condensed consolidated statements of operations. 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 Three Months Ended March 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 11,627 $ 10,730 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ - $ - Weighted Average Remaining Lease Term Operating leases 1 year 3 months 2 years 3 months Weighted Average Discount Rate Operating leases 5.0 % 5.0 % - 8.0 % Future minimum payments under the Company’s non-cancellable lease obligations as of March 31, 2024 were as follows: Future Minimum Payments Schedule of Future Minimum Payments Under Non-cancellable Lease Years Amount 2024 $ 38,166 2025 25,669 Total lease payments 63,835 Less: amount representing imputed interest ( 2,086 ) Present value of lease liability 61,749 Less: current portion ( 49,020 ) Lease liability, non-current portion $ 12,729 14 10. 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 whereby grant revenue is recognized as qualifying costs are incurred and there is reasonable assurance that the conditions of the grant have been met. Qualifying costs are presented as research and development expenses included in the Company’s statement of operations, in the period that such costs are incurred. As of March 31, 2024 and December 31, 2023, $ 715,176 and $ 953,248 has been recorded as unearned grant revenue liability on the accompanying condensed consolidated balance sheets, respectively. The Company recorded grant revenue of $ 238,072 during the three months ended March 31, 2024, and $ 205,025 during the three months ended March 31, 2023. 11. 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 . On March 21, 2024, the Company entered into an exclusive worldwide license for the IP. Details of the license agreement are reported in the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on March 27, 2024. 12. Commitments, Contingencies and Litigation The Company may, from time to time, be involved in litigation arising from the ordinary course of business. 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 condensed consolidated financial position, results of operations or cash flows. 13. Subsequent Events The Company has evaluated events that have occurred after the balance sheet 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 March 31, 2024, the Company entered into 2022 Notes with a related party investor (Executive Officer) in the aggregate principal amount of $ 95,000 . Subsequent to March 31, 2024, the Company entered into 2022 Notes with a non-related party investor in the aggregate principal amount of $ 200,000 . Series D-1 Preferred Stock Subsequent to March 31, 2024, principal and interest in the aggregate amount of $ 459,189 , owed in connection with 2022 Notes was converted into 160,445 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 Stock. 15